More Than Forty Brands Plan to Launch Prediction Markets. But How Many Can the Market Bear?
With more than 40 brands planning prediction market launches, the industry faces the same structural dynamics that decimated the U.S. sports betting field.
The U.S. sports betting market peaked around 2021, when capital was cheap, PASPA had just been repealed, and seemingly every media brand with a recognizable name believed it could capture meaningful market share. Fox Bet, SI Sportsbook, Barstool Sportsbook, WynnBet, Betway, Unibet, and ESPN Bet all launched with ambition and varying degrees of financial backing.
By 2024, most of them were gone. ESPN Bet burned through a reported $1 billion in a two-year sprint, shuttered in November 2025, and became the most expensive cautionary tale in the history of American digital gambling. The product was, as a former employee described it with admirable candor, “shit.”
The prediction market industry is now at an inflection point, with more than 40 brands either operating or planning to launch event-contract products. Q1 earnings reports for 2026 show that prediction markets have officially arrived and will only continue to grow. The relevant question is whether this ends the same way as the sportsbook boom did just a few years ago.
The Sports Betting Precedent
The consolidation of U.S. sports betting was brutal and largely predictable in retrospect. FanDuel and DraftKings built decisive technological advantages during their daily fantasy sports years, and by the time every well-funded competitor arrived, the user experience gap was already significant, and customer acquisition costs had reached levels that made marginal market share economically indefensible.
The market rapidly polarized into a duopoly controlling roughly 70% of national handle, a distant tier of three or four players fighting for the remainder, and an ongoing graveyard of brands that discovered too late that brand recognition is not the same thing as product quality or customer retention.
By 2024, five operators announced or completed U.S. exits or significant pullbacks. The pattern was consistent: launch in multiple states, bleed acquisition costs, fail to retain users at a rate sufficient to justify the burn, and exit. The barriers that killed the dying brands were not primarily regulatory or capital-related. There were product and liquidity barriers. A sportsbook with thin markets, slow odds compilation, or a clunky app simply cannot compete against one with a seven-year head start, and that became painfully obvious to both users and operators. So what does this mean to newer prediction market brands looking to enter a growing but established market?
Where Prediction Markets Stand Today
The prediction market landscape at the start of 2026 is a more complex picture than sports betting’s PASPA moment. As of February 2026, total notional volume across the industry was $127.5 billion, with actual traded volume at $69.9 billion and unique users at 2.49 million. Kalshi and Polymarket together held approximately 79% of the market, with Kalshi commanding 62% of the revenue, combined monthly volume, and roughly $260 million in 2025 in 2025. Polymarket only began charging fees in February 2026, so its revenue model is still being proven.
Combined monthly volumes across Polymarket and Kalshi hit nearly $24 billion in April 2026, according to Bernstein data. Kalshi’s dominance is driven by sports contracts, which account for roughly 72% of its volume. The concentration of volume in sports is both Kalshi’s greatest strength and its most significant vulnerability, given the ongoing state-level legal challenges targeting precisely those contracts.
Into this environment, the challengers are arriving. Hyperliquid launched HIP-4, its prediction market product, on mainnet in May 2026 and, within hours, claimed to have surpassed Polymarket’s volume on its Bitcoin up-or-down market. The decentralized exchange brings a shared liquidity layer from its dominant perpetuals business, which Bernstein analysts described as a meaningful competitive advantage for converting existing users into prediction market traders. Robinhood is building its own CFTC-licensed exchange through the Rothera joint venture with Susquehanna.
Coinbase has live prediction market functionality via its Kalshi integration. DraftKings and FanDuel both offer event contracts. Slotegrator has a prediction market engine available for B2B licensing to iGaming operators. XO Market just raised $6 million to build a user-generated prediction market platform, which it is calling “the YouTube of prediction markets.”
More than 40 brands could be in the market by the end of 2026, with the total approaching 50 and counting.
The Case That This Ends Differently
The sports betting bloodbath was driven by a specific structural dynamic: the underlying product, standardized odds on scheduled sporting events, was essentially identical across platforms. The differentiators were user experience and acquisition spend, both of which heavily favored the incumbents. Once DraftKings and FanDuel locked in first-mover advantages through better apps and bigger promotional budgets, the economics of catching them became self-defeating.
Prediction markets have meaningfully different structural characteristics that could produce a different outcome.
First, liquidity is the product. In sports betting, you can have thin liquidity and still offer a functional product because the sportsbook is the counterparty, setting lines and accepting bets directly. In prediction markets, you need other traders to take the other side of your position. A platform with deep liquidity on a given market is genuinely better than one with shallow liquidity, because the spread is tighter, the price is more informative, and the position is easier to close.
This favors incumbents, but it also means that entrants with a plausible liquidity advantage, Hyperliquid’s existing perps user base, Robinhood’s 25 million funded accounts, and Coinbase’s crypto-native users have a real pathway to compete better than ESPN Bet’s media audience ever did.
Second, the market segments are genuinely different. Kalshi’s strength is in sports and U.S.-centric events. Polymarket’s strength is in global politics and macro events with large international audiences. Hyperliquid’s strength is in crypto-correlated outcomes with a widely regarded degenerate trading community. XO’s model targets long-tail user-generated markets that neither Kalshi nor Polymarket would bother curating. These are not identical products competing on user experience alone. They are differentiated products serving different user profiles, which creates more sustainable space for multiple operators than existed in sports betting.
Third, the regulatory landscape creates forced segmentation. Because different platforms hold different regulatory licenses or operate under different frameworks, they are not all competing in the same legal market simultaneously. Kalshi is a CFTC-licensed DCM operating in 40-plus U.S. states. Polymarket relaunched in the U.S. through its QCEX acquisition but is still rebuilding its domestic presence. Hyperliquid’s initial product is effectively offshore. The segmentation is not entirely voluntary, and it may not persist as the regulatory picture clarifies, but for now it means the 40-plus brands are not all fighting for the same pool of customers at the same time.
The Case That It Ends the Same Way
The counterargument is equally compelling.
Liquidity concentrates. In financial markets, volume attracts volume, and the platform with the deepest book on a given event will drain liquidity from competitors on that same event over time, we’ve seen that movie before.
The crypto perpetuals market, which Hyperliquid now dominates after years of fragmentation, demonstrates how liquidity can consolidate once a clear winner emerges. If one prediction market platform establishes itself as the obvious destination for the World Cup, the Super Bowl, or the next presidential election, the others will struggle to compete on those events, regardless of how good their product is.
Sports contracts are the volume driver and the regulatory target. Kalshi’s sports business represents 72% of its total volume. Every operator entering the prediction market space is implicitly betting that the legal resolution of the state preemption fight will go in their favor. If the Supreme Court or appellate courts ultimately side with states on sports event contracts specifically, the addressable market shrinks dramatically for every platform simultaneously, and those that built their entire user acquisition strategy around sports are in serious trouble.
Customer acquisition costs will rise. They always do. The current environment, in which prediction market platforms are still in the growth and awareness phase, and CAC has not yet reached the levels that killed second-tier sportsbooks, will not last indefinitely. Kalshi spent aggressively on marketing throughout 2025 and 2026 and is raising at a $22 billion valuation. Polymarket is raising at $15 billion. Both are pricing in a large, winner-take-most market. The 40-plus brands competing for share, once those acquisition costs normalize, will face the same margin math that eliminated Unibet, WynnBet, and SI Sportsbook.
What the Sports Betting Data Tells Us
State-level sports betting data provides useful context for calibrating the scale question. In 2025, total U.S. handle grew 11%, a sharp deceleration from the 24% growth the prior year, with retail handle falling nearly 12%. The early-phase growth of the legal sports betting market, in which the addressable market expanded rapidly as new states came online, has given way to a more competitive, lower-growth environment in which operators fight over a pool that is expanding more slowly than their cost bases.
Prediction markets do not face the same state-by-state rollout constraint, which means the early-phase expansion dynamic is different. The addressable market is effectively national from day one for any federally licensed DCM. But the flip side of that is that there is no geographic sequencing to protect early movers. When FanDuel or DraftKings entered a new state, they had months or years before significant competitors arrived. A prediction market launching today is competing with Kalshi and Polymarket everywhere, immediately.
The Likely Outcome
The most probable scenario is not an exact replay of the sports betting shakeout, but a version of it that produces a similar endpoint through somewhat different mechanics.
The crypto-native platforms, Hyperliquid chief among them, will carve out durable positions with audiences that Kalshi and Polymarket cannot easily reach. The infrastructure plays, Robinhood and Coinbase, will most likely succeed in proportion to how seriously they treat prediction markets as a core product rather than a feature. The B2B licensing model, Slotegrator, and similar, will distribute event contract functionality broadly but will not produce standalone brands that meaningfully challenge the leaders. The long-tail differentiated models, XO and its user-generated approach, may survive in niche positions.
Everything else, the DCMs with no differentiated user base, the media brand plays, counting on audience to substitute for product, the international operators without U.S.-specific infrastructure, will face the same economics that destroyed their equivalents in sports betting, and most of them will not survive the first regulatory correction or the first sustained bear market in prediction market volume.
The market can probably bear five to eight major durable operators. It currently has 40 planning to enter. That gap in prediction markets closes the same way it always does, and not every operator is built to survive.
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