Prediction Markets Forecast to Surpass $10B in Annual Revenue By 2030

Prediction markets companies are projected to increase annual revenues more than fivefold to exceed $10 billion by 2030, according to analysis from Citizens Financial Group Inc. Currently, they generate an average of $2 billion every year due to increasing trade volumes in marketplaces that provide contracts related to sporting events, politics, economics, and cultural issues.

Platforms such as Kalshi and Polymarket have received far more traction as people place binary bets on real-world outcomes. At Robinhood Markets, where individuals can leverage Kalshi contracts, prediction markets are growing at a rate that outpaces any previous product and now represent approximately 10% of Robinhood's overall revenue.

The growth in these markets is expected to increase as hedge funds and institutional traders utilize them as channels for expressing opinions on central bank policies, acquisitions, and major events.

Analysts at Citizens believe the current rate of growth is similar to how the market introduced itself in the early stages of option trading. With prediction market apps, however, the main product traded has been sports-related contracts.

Sports prediction markets also enable betting on sports in regions where sports gambling is not readily available. According to Citizens, the current global market for gambling from all sources is estimated to be $100 billion. They argue that the competition among sports gambling companies has led most into the aspect of organizing events.

However, besides the gambling aspect, researchers explain that prediction markets are useful because they specifically hedge risks that are difficult to hedge using other finance instruments. Prediction markets are able to quickly set up contracts for new events that would eventually be used for institutional investment.

Pop culture bets alter use of prediction markets

As prediction markets continue to expand beyond the finance and politics sectors, wagers on pop culture events are transforming the way regular users engage with platforms. 

The stakes that the users are putting on film releases, musical performances, celebrity announcements, and other business announcements have been increasing. At the same time, bets on cryptocurrencies and meme stocks continue to decrease. 

All this has increased activity and interest in entertainment-related contracts. 

Users have achieved substantial profits by accurately predicting this kind of event. Because of their binary nature, either a payout is released, or a contract expires worthless, which has all the makings of a gamble rather than an investment. 

Nevertheless, traders find these markets easily accessible due to the availability of information, with participants commonly investigating online reviews, streaming views, trends on social networking sites, and news articles to identify opportunities in price disparity. 

Researchers have found that the more access people have to online betting products such as prediction sites, the more debt they accumulate, lower credit scores, and the likelihood of bankruptcy. The results reflect the increasing conflict between rapid market growth fueled by innovation and the economic dangers posed to consumers due to the growing popularity of prediction markets.