What started as a niche corner of the internet has evolved into a multibillion-dollar industry.
In 2025, prediction markets have become a substantial instrument for speculation and the forecasting of real-world events in both finance and media. Two major players in the sector, Polymarket and Kalshi, have amassed a combined volume of over $37 billion (€31.5bn) in wagers placed this year, according to the 2026 Digital Assets Outlook Report.
A prediction market is essentially a platform where people bet on what they think will happen, and the price of the bet becomes a forecast. For example, instead of asking people directly or through on-the-street interviews who they expect will win an election, you let people put money on their answer.
The market price tells you what outcome people collectively think is most likely, and the forecast updates in real time, which is why some believe prediction markets capture collective thinking better than polls.
The sheer amount of capital flowing through these exchanges has triggered a gold rush. This month, Kalshi secured a Series E funding round of $1 billion(€850mn) valuing the platform at $11 billion (€9.4bn).
Polymarket hit a milestone back in October when Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, announced a strategic investment of up to $2 billion (€1.7bn) and valued the platform at $8 billion (€6.8bn). Additionally, ICE became the distributor of Polymarket’s data to institutional investors globally.
The overall interest from financial institutions is undeniable. Terrence Duffy, the CEO of CME Group, the world’s leading derivatives exchange, described prediction markets as “a legitimate domain of speculation and information aggregation that our clients are demanding” during their third-quarter earnings call.
EU-based or homegrown prediction markets have yet to take off, and EU regulations have kept the existing ones largely offshore.
From beating polls to signing partnerships
As platforms, prediction markets function similarly to a financial exchange. Users buy and sell binary contracts, betting yes or no, on the outcomes of unknown future events such as election results, corporate earnings reports and sports scores.
Typically, these contracts pay out $1 if the event occurs and $0 if it does not. For example, if a contract is priced at $0.50 it implies that the collective belief of the participants is pricing a 50% probability of an event occurring.
The relevance of prediction markets was cemented after the 2024 US presidential election and the 2025 German snap election. In both cases, these platforms functioned as real-time scoreboards, consistently pricing outcomes and delivering predictions that were nearly as reliable or even more so than traditional polling.
This perceived accuracy has now forced legacy media to adapt.
Earlier this month, CNN set a global precedent by partnering with Kalshi to integrate live prediction market data into its broadcasts. A couple days later, CNBC made a similar announcement.
Before the recent partnerships, several media outlets were already starting to incorporate these predictions into their regular news stories, such as interest rate decisions and legislative votes, granting them similar editorial weight to conventional polling.
Hyper-commodification, insider trading and outcome manipulation
Critics of prediction markets argue that they have effectively gamified everyday human outcomes, drawing a dangerously thin line between serious forecasting and high-stakes gambling.
This gamification has accelerated a phenomenon some call “hyper-commodification”, which refers to the process of turning every aspect of social life into a commodity that becomes subject to market forces.
In its worst form, the phenomenon encourages gambling, creates new opportunities for insider trading and incentivises manipulating the outcomes of real-world events.
In early December, a Polymarket trader nicknamed “AlphaRaccoon” sparked controversy after winning 22 out of 23 bets related to Google’s 2025 Year in Search rankings.
The trader netted over $1 million (€850,000) in 24 hours, and was later accused of being a Google employee who used internal access to proprietary search data to find out the most searched terms ahead of the company’s announcement.
The incident raised concerns about the integrity of prediction markets, especially since the fact that users can be anonymous makes it more difficult for those engaging in insider trading to be immediately weeded out.
In late October, Coinbase CEO Brian Armstrong, who leads one of the largest crypto assets exchanges, turned the company’s third-quarter earnings call into ademonstration of the risks of outcome manipulation in prediction markets.
Users on Polymarket and Kalshi had thousands of dollars riding on whether Brian Armstrong would use specific buzzwords and the CEO intentionally paused the call to enunciate a list of those words. Within seconds, the implied probability of those terms being mentioned spiked from roughly 15% to 100%.
Armstrong later tweeted that the exercise was “spontaneous” but for regulators it served as a stark example of the dangers of prediction markets being manipulated and losing their advantages as neutral forecasting tools.
The EU’s regulatory firewall
In the European Union, the crackdown on prediction markets began in late 2024 when the French National Gaming Authorityblocked Polymarket, ruling that its operation constituted unlicensed gambling.
In the following months, Belgium, Poland and Italy also issued bans.
The Romanian National Gambling Office (ONJN) blacklisted Polymarket in October after it hosted wagers on the Romanian 2025 presidential election held in May. In this case, the volume traded exceeded $600 million and the President of ONJN stated that “regardless of whether you bet in lei or crypto, if you bet money on a future result, under the conditions of a counterpart bet, we are talking about gambling that must be licensed.”
However, there are still many EU member states where prediction markets are accessible, such as Germany and Spain. The broader EU regulatory landscape remains fragmented, with no unified framework in place.
As we head into 2026, prediction markets also face the full implementation of the EU’s Markets in Crypto-Assets (MiCA) regulation, as most of these platforms make use of blockchain technology.
By July of next year, the grandfathering period ends for securing a Crypto-Asset Service Provider licence. According to the European Securities and Markets Authority, MiCA contains strict market abuse regimes that will apply to any prediction market using crypto assets.
The new reality is that every world event is being priced in real-time and the EU must decide if it will be a part of this era or opt for an outright ban.
