Cryptocurrency-based prediction markets have experienced rapid growth since 2025, posing a direct challenge to the traditional sports betting industry. Industry sources predict that global prediction market trading volume will reach approximately $40 billion this year, representing a roughly 400% increase from the previous year and posing a serious threat to the $300 billion sports betting market.
Prediction markets are structures that express the probability of a specific event occurring as a price. Participants invest money in either "occurrence" or "non-occurrence," and the market price is formed by the collective probability reflecting the judgments of many. Unlike traditional betting, which focuses on the outcome of sports matches, prediction markets are rapidly expanding to include political elections, central bank interest rate decisions, Bitcoin price ranges, ETF approvals, and geopolitical risks.
A representative example is Polymarket, a decentralized prediction market. This platform has gained recognition by outperforming polls and expert forecasts in predicting the outcome of the US presidential election, the timing of Federal Reserve interest rate cuts, and major virtual asset price forecasts. Kalshi, which operates within the US regulatory framework, is also considered to be elevating prediction markets to a structure closer to institutional finance.
What market participants are noticing is that prediction markets are evolving beyond mere gambling into information infrastructure. Because prediction market prices are collective judgments with real money at stake, they are considered less susceptible to distortion than surveys or single-expert analysis. Consequently, prediction market prices are increasingly being used as a kind of leading indicator in policy decisions, financial events, and technology approvals.
This structure creates a fundamental difference from sports betting. While sports betting is primarily an entertainment-focused industry, prediction markets have the potential to expand into areas like finance, policy, and risk management. It's in this context that some trading firms and investors have begun using prediction market data as a reference indicator.
However, the pace of growth depends on the regulatory environment. The industry's scope could change significantly depending on whether each country's authorities classify prediction markets as gambling, derivatives, or information markets. Clearer regulatory standards are expected to lead to increased institutional capital inflow and corporate use, further sharpening the competitive landscape with the sports betting industry.
The industry sees 2025 as a turning point, when prediction markets will rapidly become the most popular cryptocurrency-use service. This analysis suggests a shift in focus from the industry focused on predicting game outcomes to a market focused on trading future probabilities.
