rewrite this title Year in Prediction Markets: From Regulatory ‘Sinkhole’ to Multi-Billion Dollar Business – Decrypt

Prediction markets are about the buzziest thing in crypto right now—and 2025 was the year they hit the mainstream.

These markets enable their users to wager on the future outcome of virtually anything—from crypto and stock prices to sports, cultural, and political events. There have even been markets on what color tie Federal Reserve Chair Jerome Powell would wear.

Recently, prediction markets have exploded to above $2 billion in weekly volume across the major platforms: Polymarket, Kalshi, Limitless, and Myriad. (Disclosure: Myriad is a product of Dastan, Decrypt’s parent company.) It’s been a dramatic surge for an industry that ended the previous year in limbo.

By late 2024, industry leaders Polymarket, Kalshi, and other forecasting sites had become a major part of election-night political discourse. Polymarket, in particular, set all-time highs in volume and visibility as the presidential race tightened. And it was one of the few platforms to accurately predict President Donald Trump’s reelection.

Around the same time, crypto exchange Crypto.com launched a sports prediction market platform through its affiliate, North American Derivatives Exchange. The company has a designated contract market license through the CFTC, which allows it to list event contracts.

But there was severe backlash. Even before the election, Polymarket was dismissed as a mouthpiece for foreign money. France blocked Polymarket and the FBI raided the company and CEO Shayne Coplan’s home right after the election in an investigation whose scope remains unclear.

So it was a huge turnaround in February when the Commodities and Futures Trading Commission scheduled a public roundtable to review prediction markets. Acting Chairman Caroline D. Pham, who was appointed the same day Trump was inaugurated, criticized the commission’s previous stance, saying at the time that it had become a “sinkhole of legal uncertainty” that hindered innovation.

As the regulatory animosity began to fade, the CFTC dropped its appeal of a court ruling that had cleared the way for Kalshi to offer event contracts on U.S. election outcomes. Just weeks later, the popular trading app Robinhood partnered with Kalshi to launch March Madness prediction markets.

By the summer, a buzzy Certuity report was estimating that prediction markets could reach $95.5 billion by 2035, with a compound annual growth rate of 46.8%. Meanwhile, Polymarket spent $112 million acquiring QCX, a CFTC-licensed exchange in preparation for its November return to the U.S. market.

As prediction markets seeped further into the mainstream, they began to show up far beyond crypto-native platforms.

The cultural crossover became impossible to ignore when South Park devoted an episode to prediction markets, lampooning Americans’ growing obsession with wagering on everything from elections to everyday life.

The long-running animated series—often seen as a bellwether for when niche trends truly hit the mainstream—portrayed prediction markets less as a fringe crypto curiosity and more as a ubiquitous, and faintly absurd, part of modern culture.

In October, Trump Media & Technology Group announced it was launching a new prediction market product called Truth Predict in partnership with Crypto.com’s U.S. derivatives arm, allowing users on the Truth Social platform to wager on outcomes ranging from sports to elections and economic indicators. More recently, CNN, CNBC and Google signed distribution deals with Kalshi. And the company landed a multi-year deal with the National Hockey League.

Polymarket hasn’t been resting on its laurels. It’s inked a deal with TKO, making it the exclusive prediction market of UFC and Zuffa Boxing and an exclusive media deal with Yahoo Finance. In October, the company announced that New York Stock Exchange parent company ICE invested $2 billion in a funding round that values the platform at $9 billion.

Industry startups have seen impressive growth as well.

Limitless, an on-chain prediction market like Polymarket that runs on the Base network, raised $10 million in a token sale in October. Meanwhile, Myriad—which operates on multiple blockchain networks, including BNB Chain and Ethereum layer-two networks Abstract and Linea—recently reported 10X growth in trading volume over just three months. The platform also signed a distribution deal with the popular crypto wallet Trust Wallet to offer its prediction markets from within the app.

All the momentum has bigger players, like Robinhood, looking to venture beyond its Kalshi partnership. And both frontrunners, Kalshi and Polymarket, were in D.C. to advocate for their industry at an SEC-CFTC roundtable in October.

“Polymarket’s rise is astonishing, and with it, an ecosystem around prediction markets is starting to grow that reminds me a lot of early DeFi days,” Claude Donzé, principal at Greenfield Capital, told Decrypt. “Professional-grade frontends, trading terminals and news aggregation systems like Betmoar or Polymtrade, and even early experiments using outcome shares as collateral are being built.”

But it’s not all been smooth sailing. As prediction markets have claimed compliance with federal regulations, states have bristled at what they perceive to be a bypassing of their own state level gambling regulations.

Kalshi has borne the brunt of this, fighting battles in New York, Nevada, and elsewhere. The state pushback hasn’t been enough to slow down new entrants. In early December, crypto exchange Gemini got the nod from the CFTC to offer prediction markets.

Traditional gambling and gaming firms have taken notice, too.

DraftKings and FanDuel, two of the biggest names in U.S. sports betting, moved into prediction markets in 2025 as the sector’s trading volume surged to new highs. But analysts told Decrypt the companies may be entering too late to overtake early leaders like Polymarket and Kalshi, which have already built large user bases and market depth.

Donzé added that all the hype around prediction markets makes him certain the industry is in “the early days of an entire new layer of markets and applications, all being built around prediction markets.”