What exactly is a prediction market / event contract?

A prediction market lets traders buy and sell contracts tied to the outcome of a real-world event — will the Fed cut rates this meeting, who wins an election, will a specific economic data point come in above or below a threshold. Each contract typically resolves to $1 if the event happens and $0 if it doesn't, so the market price between $0 and $1 functions as an implied probability. In the US, Kalshi and DraftKings' DKeX operate these as CFTC-regulated 'event contracts' — legally similar to commodity futures — rather than as gambling products regulated state-by-state, which is the key structural feature that has let them expand nationally.

Why has prediction market volume grown so fast in 2026?

Combined Kalshi and Polymarket monthly volume went from under $5 billion in September 2025 to roughly $24 billion by April 2026 — a nearly 5x increase in about seven months. Several forces converged: high-profile 2026 midterm election contracts drove mainstream attention and media coverage; sports event contracts (in states where traditional sports betting is restricted) gave Kalshi and DraftKings' DKeX a large addressable audience; distribution deals embedded event contracts directly inside apps millions of people already use, like Robinhood; and institutional capital (ICE's Polymarket investment, rising valuations) signaled the category was maturing beyond a crypto-native niche.

Is trading on Kalshi or Polymarket legal in the US?

Kalshi operates as a CFTC-regulated Designated Contract Market, meaning its event contracts are federally regulated similarly to commodity futures — this is the legal basis that allows Kalshi to offer sports and election-related contracts even in states with restrictive traditional sports-betting laws, a point that has drawn legal challenges from several state gambling regulators. Polymarket's situation is more layered: for years it operated primarily offshore and blocked US users, but it has since acquired a CFTC-registered derivatives exchange to establish a compliant path for US operations. Regulatory status is evolving and contested — always check current terms before trading, and understand that state-level challenges to the CFTC's jurisdiction over sports-related event contracts remain an active legal battleground.

How do companies like CME, Robinhood, and DraftKings actually make money from prediction markets?

The revenue models mirror traditional derivatives exchanges: an exchange operator (CME, Kalshi itself, or DraftKings' DKeX) earns a per-contract transaction fee on every trade regardless of outcome, market makers earn the bid-ask spread for providing liquidity, and distribution partners (like Robinhood embedding Kalshi's contracts) can earn a revenue share or benefit indirectly through increased user engagement, deposits, and trading activity across their broader platform. This fee-based model is structurally similar to how stock and options exchanges make money — volume, not any single trade's outcome, is what drives revenue, which is why $24B in monthly volume matters so much to the public companies with exposure to it.

Could Kalshi or Polymarket go public, and how would I invest in them directly?

Kalshi has reportedly been exploring an IPO as early as late 2026 or early 2027, following a valuation trajectory from $11B (December 2025) to $22B (March 2026) and reported talks around $40B. Polymarket, still privately held, received a roughly $2 billion strategic investment from Intercontinental Exchange (ICE) in October 2025 at approximately an $8 billion valuation and has reportedly been fielding a new funding round above $20 billion. Neither company is currently a publicly traded stock, so until an actual IPO happens, ICE's equity stake gives public-market investors indirect exposure to Polymarket's growth, while direct Kalshi exposure isn't available to public investors at all yet.

What's the biggest risk to the prediction-market stock theme?

Regulatory risk is the single biggest overhang. Several state gambling regulators have challenged whether CFTC-regulated event contracts should be allowed to offer sports-outcome contracts that closely resemble traditional sports betting, arguing it circumvents state licensing and tax regimes. An adverse court ruling, new federal legislation, or a shift in CFTC leadership and posture could materially restrict the sports-contract category that has driven a large share of recent volume growth for Kalshi and DraftKings' DKeX alike. A second risk is valuation — Kalshi and Polymarket's valuations have risen extremely fast on rapid volume growth, and a slowdown in that growth curve (post-election, post-hype) could compress both direct and indirect (ICE, Robinhood, DraftKings) equity valuations tied to the category.

Prediction MarketsEvent ContractsFintechSports & Elections

Prediction Market Stocks 2026: How to Invest in the Kalshi vs Polymarket Boom

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September 7, 2026 · BriMindInvest Research Team · 12 min read

Combined monthly trading volume on Kalshi and Polymarket rocketed from under $5 billion in September 2025 to roughly $24 billion by April 2026. Kalshi is reportedly in talks near a $40 billion valuation and eyeing an IPO as early as late 2026. Neither company is public yet — so here's exactly how CME Group, Robinhood, DraftKings, and Intercontinental Exchange give investors real, tradable exposure to the prediction-market boom today.

Prediction Markets at a Glance — September 2026

$24B

Combined Monthly Volume

Kalshi + Polymarket, April 2026 — up from under $5B in Sept 2025

$40B

Kalshi Valuation Talks

Up from $11B (Dec 2025) → $22B (March 2026)

$20B+

Polymarket Valuation Target

After ICE's ~$2B strategic investment at ~$8B (Oct 2025)

~$1.15B

Kalshi Lifetime Fee Revenue

~$850M generated in 2026 alone

$3.4B

DraftKings DKeX Volume

Annualized consumer volume via Railbird acquisition

Late 2026/27

Kalshi IPO Timeline

Reportedly exploring a public listing

CFTC

Regulator

Event contracts regulated federally, not state-by-state gambling law

$123

Robinhood Price Target Bump

Analyst target raised on event-contract growth

What's Driving the 2026 Prediction Market Explosion

Prediction markets let traders buy contracts tied to a real-world outcome — an election result, a Fed rate decision, an economic data print, or a sports outcome — with the market price functioning as an implied probability. What used to be a niche corner of political forecasting has become one of the fastest-growing categories in all of trading.

A Nearly 5x Volume Surge in Seven Months

Combined Kalshi and Polymarket monthly volume went from under $5B in September 2025 to roughly $24B by April 2026. High-profile 2026 election contracts, growing retail awareness, and expanding sports-event-contract availability all compounded at once.

A Regulatory Structure That Sidesteps State Gambling Law

Kalshi and DraftKings' DKeX operate under CFTC oversight as federally regulated derivatives exchanges, not state-licensed sportsbooks. That structure has let them offer sports-outcome contracts nationally — including in states where traditional sports betting remains illegal — though it has also triggered legal challenges from state gambling regulators who argue it's an end-run around their licensing authority.

Institutional Capital Has Arrived

Intercontinental Exchange's roughly $2 billion strategic investment in Polymarket, DraftKings' acquisition of Railbird Technologies to build its own exchange (DKeX), and Kalshi's own valuation climbing from $11B to reported $40B talks all signal that prediction markets have graduated from a crypto-adjacent curiosity to a category serious financial institutions are underwriting.

Four Tiers of Public-Market Exposure

Kalshi and Polymarket are both still privately held, so investors looking for stock-market exposure to the category need to think in tiers, from most direct infrastructure play to most speculative adjacency.

Tier 1CMECME GroupExchange Infrastructure~$95B

CME Group operates the deepest, most liquid derivatives exchange in the world and has moved into event contracts directly, competing for the same futures-adjacent order flow that Kalshi and Polymarket are capturing. As the incumbent exchange operator, CME earns transaction fees regardless of which venue ultimately wins market share in event-based trading, and its clearing infrastructure is a natural fit for scaling regulated prediction markets.

Tier 2HOODRobinhood MarketsRetail Distribution~$95B

Robinhood offers CFTC-regulated event contracts (in partnership with Kalshi's infrastructure) directly inside its retail trading app, giving tens of millions of existing users one-tap access to prediction markets on elections, economic data, sports, and more. Analysts have raised Robinhood's price target to $123 specifically citing event-contract volume growth as a new, high-margin revenue stream layered on top of its existing brokerage business.

Tier 3DKNGDraftKingsOwns Its Own Exchange~$18B

DraftKings acquired Railbird Technologies to launch DKeX, its own CFTC-regulated prediction-market exchange, rather than merely distributing a partner's contracts. DKeX is already running at a $3.4B annualized consumer volume, giving DraftKings a direct, higher-margin exchange-fee revenue stream that diversifies it beyond traditional sports-betting hold rates.

Tier 4ICEIntercontinental ExchangeStrategic Investor~$100B

ICE (parent of the NYSE) made a roughly $2 billion strategic investment in Polymarket in late 2025 at an ~$8B valuation, giving ICE equity upside as Polymarket's valuation has since been reported to be fielding offers north of $20B. It's a direct way for a publicly traded exchange operator to own a stake in the prediction-market boom without building a competing product from scratch.

How Prediction-Market Exchange Revenue Works

A trader buys a contract tied to an outcome

Contracts resolve to $1 if the specified event happens and $0 if it doesn't — a trader buying at $0.60 is implicitly pricing that outcome at a 60% probability.

The exchange charges a per-contract transaction fee

Kalshi, DraftKings' DKeX, and CME all earn a fee on every contract traded — collected regardless of which side wins, exactly like a traditional futures exchange's transaction-fee model.

Market makers earn the bid-ask spread

Liquidity providers quote both sides of each contract and profit from the spread between their buy and sell prices, tightening as volume and competition increase.

Distribution partners capture engagement and revenue share

Robinhood embeds Kalshi's regulated event contracts directly into its app, driving trading activity, deposits, and cross-sell into its broader brokerage business — turning prediction markets into a new top-of-funnel product rather than a standalone bet.

Kalshi vs Polymarket: Head-to-Head

Kalshi vs Polymarket comparison
	Kalshi	Polymarket
Latest Valuation	~$22B (Mar 2026); reported $40B talks	~$8B (Oct 2025 raise); reportedly fielding $20B+ round
Key Backer	Independently raised venture capital	Intercontinental Exchange (~$2B investment)
US Regulatory Basis	CFTC-regulated Designated Contract Market	Acquired a CFTC-registered exchange for US compliance
Core Product	Federally regulated event contracts (elections, econ data, sports)	Broader crypto-native prediction markets plus US-compliant contracts
Public Listing Plans	Reportedly exploring IPO as early as late 2026/2027	No confirmed IPO plans; ICE stake is current public-market proxy

Bull Case

Volume growth has been extraordinary — nearly 5x in seven months — and prediction markets are still a small fraction of the traditional betting and derivatives markets they're beginning to overlap with
The CFTC's federal regulatory umbrella has let Kalshi and DKeX expand nationally in ways traditional sportsbooks legally cannot, a structural advantage rather than a loophole that closes overnight
Public companies (CME, Robinhood, DraftKings, ICE) get exchange-fee or engagement upside from category growth without needing Kalshi or Polymarket itself to go public
A Kalshi IPO as early as late 2026/2027 would create a new, large, high-growth publicly tradable pure-play, and would likely re-rate ICE's Polymarket stake and comparable exposure higher
Election, economic-data, and sports event contracts all represent recurring, non-correlated demand drivers rather than a single one-time catalyst

Bear Case

Regulatory risk is significant and active: multiple state gambling regulators are challenging whether CFTC-regulated sports event contracts should be permitted to bypass state licensing and taxation
Valuations for both private companies have risen extremely fast on a volume curve that could plateau post-election or amid tighter regulation, which would compress comparable public-market multiples
Neither Kalshi nor Polymarket is directly investable today — public exposure via CME, Robinhood, DraftKings, or ICE is indirect and diluted by each company's much larger core business
Sports-outcome event contracts in particular face the most direct legal and political pushback, since they most closely resemble the sports betting products that remain restricted in many states
A prolonged legal or legislative setback for the CFTC's jurisdiction over sports contracts could force a business-model reset for Kalshi and DKeX specifically

Frequently Asked Questions

Bottom Line Verdict

Prediction markets have gone from a political-forecasting curiosity to a $24-billion-a-month trading category in under a year — but the two companies at the center of it, Kalshi and Polymarket, remain privately held. For now, the most practical way to invest in the boom is through the public companies capturing exchange fees, distribution, or strategic equity upside from its growth, while watching regulatory developments closely given how much of the recent volume surge is tied to contested sports-outcome contracts.

Prediction Market Stock Picks

CME (CME Group)Incumbent exchange infrastructure that wins fee revenue regardless of which venue captures share

HOOD (Robinhood)Direct retail distribution of regulated event contracts to tens of millions of existing users

DKNG (DraftKings)Owns its own exchange (DKeX) rather than just distributing — highest direct operating leverage to volume growth

ICE (Intercontinental Exchange)Strategic equity stake in Polymarket plus core exchange business as a lower-volatility hedge

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