Prediction markets experienced an unprecedented surge in the third quarter of 2025, with platforms like Kalshi and Polymarket reporting record-shattering numbers. Combined notional volume exceeded $3 billion, a more than five-fold increase compared to the same period last year. This surge has even surpassed the activity seen during the 2024 US presidential election, attracting the attention of established financial players such as Wall Street's CME Group and Intercontinental Exchange (ICE).
Data from Bloomberg indicated that both Kalshi and Polymarket crossed the $2 billion mark in the week ending October 19, achieving their highest volumes to date. The primary driver behind this rally was a significant wave of sports betting, particularly on the New York-based platform Kalshi. Kalshi leveraged its federal license to offer bets nationwide, bypassing state gambling regulators.
Kalshi's contract volumes saw a substantial increase following the kickoff of the football season in August and September. A new partnership with Robinhood brought in a flood of retail traders, further boosting user engagement. Meanwhile, Polymarket, which remains inaccessible to US traders due to past regulatory disputes, also experienced a similar jump in traffic. Crypto enthusiasts and political bettors found new and engaging events to wager on.
Kalshi Leverages Robinhood Crowd as Football Spikes Trading
Football bets were the dominant force during the week of October 19, contributing $867 million in volume on Kalshi and $415 million on Polymarket. Kalshi gained a competitive advantage by offering parlays, a feature that allows users to combine multiple low-odds events into a single bet. In prediction markets, each contract settles to either $0 or $1 based on the outcome of the event.
Dune Analytics user dunedata tracked public figures, counting only one side of each trade to ensure comparability between the two exchanges. Kalshi's data was sourced from its own filings, which a spokesperson confirmed as accurate. Polymarket's data was obtained from its public blockchain. A representative from Polymarket stated that this on-chain data is "the best available publicly," while acknowledging that "there are always nuances to it."
The previous peak in trading volumes occurred during the 2024 presidential election. During that period, Kalshi secured a significant legal victory against the Commodity Futures Trading Commission (CFTC), a win that permitted Kalshi to legally host contracts on election outcomes. Both Kalshi and Polymarket had markets reflecting high odds for Donald Trump's victory. Since his return to the White House, Trump and his associates have shown strong support for the prediction market industry, with his son, Donald Trump Jr., serving as an advisor to both platforms.
Polymarket Reclaims Lead as ICE and CME Pile In
In August, Kalshi briefly surpassed Polymarket in overall trading volume, largely due to its sports betting offerings. However, Polymarket regained the lead in the week of October 19, doubling its sports-related volume. While Kalshi benefited from its regulated status within the U.S., Polymarket operated internationally due to prior legal challenges.
This landscape is evolving. Polymarket recently acquired QCX, a CFTC-licensed derivatives exchange, positioning itself for a return to the U.S. market. Major Wall Street institutions are also entering the space. ICE, the owner of the New York Stock Exchange, has invested $2 billion for a stake in Polymarket. Concurrently, CME Group is planning to launch contracts tied to sports games. These developments occur even as shares of DraftKings and FanDuel's owner, Flutter Entertainment, have seen declines.
The platforms operated by DraftKings and FanDuel are still dependent on state-by-state gambling licenses. In contrast, Kalshi's federal license grants it broader access, though this position is not without challenges. Several state regulators are attempting to shut down Kalshi, asserting that its bets violate state gaming laws. Kalshi is actively contesting these cases in court. A spokesperson for Kalshi emphasized, "We're federally regulated. That's what matters."
On October 18, during a period of high activity related to college football bets, users trading on Kalshi reported platform issues. The platform acknowledged experiencing "data loading delays due to extreme demand" but confirmed that trading continued on the backend without interruption. The issue was reportedly resolved quickly.