From Trump trades to Musk tweets and NFL prop bets, a record year for prediction markets sets up a pivotal 2026
Prediction markets had their biggest year on record in 2025, with Polymarket and Kalshi emerging as dominant players amid a surge of investment, media attention, and multi-billion-dollar valuations.With U.S. midterm elections approaching in 2026, an event that could prove to be a massive trading opportunity similar to the presidential race of 2024, the two startups now face a pivotal test: whether they can move beyond hype and prove their value as forecasting tools at scale.Even as interest in prediction markets has gone mainstream, some critics question whether reported trading volumes are overstated, while neither of the two companies has likely begun generating substantial revenues."Their valuation is not based on revenue. It's based on the data," Leo Chan, co-founder and CEO of the predictive intelligence startup Sportstensor, told The Block. "What makes Polymarket so valuable is that they have data, collective intelligence, decentralized data from all around the world, wisdom of the crowd, essentially, that is able to give you much more accurate predictions on what's going to happen.""This kind of information, this kind of data is extremely important and extremely valuable to people outside of the traders," Chan added. "All these financial institutions that could use this kind of data see prediction markets as an infrastructure to collect this data."In November, Kalshi raised $1 billion at an $11 billion valuation, in a round led by Sequoia and CapitalG. That came soon after a $300 million Series D round at a $5 billion valuation in October. Meanwhile, Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, invested $2 billion in Polymarket. Afterwards, CEO Shayne Coplan said the company was valued at $9 billion.Predictions markets were thrust into the spotlight at the end of last year after trading volumes surged during the U.S. elections. Of note, Chainalysis estimated that a French Polymarket whale made a profit of $78.7 million betting on the elections, primarily on Donald Trump's victory.Corporate brands ink dealsMajor corporate brands have taken notice of Kalshi and Polymarket, with both companies recently announcing a slew of partnerships. Kalshi has partnered with news networks CNBC and CNN. Polymarket inked partnerships with Yahoo Finance and the UFC. The National Hockey League signed multi-year licensing agreements with Kalshi and Polymarket.Throughout this year, both platforms expanded the number of markets offering chances for users to wager on sporting events.Some are doubtful that the partnerships will have an impact. "A lot of them are marketing that will take ages for any kind of partnership to actually yield a new result," Ali Habbabeh told The Block. Habbabeh runs a small, rival prediction markets startup called XO Market."I just don't see it happening very soon that I can go on CNN and trade on Trump while I'm on CNN," Habbabeh said.Trading volumes hype or the real deal?Habbabeh, along with other analysts, question whether Polymarket and Kalshi’s reported trading volumes overstate actual usage."Usage of prediction markets is heavily exaggerated," Habbabeh said. "People imagine everybody is trading on Polymarket, everybody trading on Kalshi, which is not true. They have a lot of users, [but] there is a very small subset of people actually trading on Polymarket or Kalshi."Kalshi and Polymarket have generated an all-time cumulative trading volume of nearly $40 billion, according to The Block Data Dashboard. Earlier this year, however, it appeared volumes were billions of dollars higher as a “double count" error in how Polymarket’s onchain data was read inflated the platform's numbers, according to The Block Research.Notably, Polymarket’s data is publicly verifiable, whereas Kalshi’s is self-published and unverifiable.Kalshi rejected any suggestion that its trading volumes may be exaggerated."Part of our agreement with the CFTC as a designated contract market is that we have to post these volumes every day publicly," Kalshi executive Jack Such told The Block. "That’s a legal requirement … so I would say our volume is definitely not inflated or deflated."Such also defended the value of Kalshi's partnerships: "Getting your contracts in front of a new audience … they literally drive trading to the exchange."Robinhood and Coinbase enter the frayPlatforms that have millions of crypto trading customers also jumped into prediction markets in 2025.Early in the year, stock and crypto trading platform Robinhood partnered with Kalshi to launch a prediction markets hub within its app. By October, brokerage Piper Sandler had estimated Robinhood users were accounting for "about 25% to 35% of Kalshi volumes on any given day."Robinhood's Vice President and General Manager of Futures and International JB Mackenzie couldn't confirm the Piper Sandler estimate, but said volume is on the uptick through both Kalshi and ForecastEx, which also supports prediction trading."We did 9.5 billion contracts so far this year, and we did over 3 billion in November alone," Mackenzie told The Block. "For each of the two providers we have, we provide them with a meaningful amount of contract volume."Robinhood's prediction markets business is on track to become a $300 million business, according to CNBC. Next year, the company plans to launch its own exchange through a new joint venture.Crypto.com and Coinbase have also begun providing customers with the means to wager crypto on specific events. Both sports apparel giant Fanatics and Trump-backed Truth Social partnered with Crypto.com on prediction markets, while Coinbase initially worked with Kalshi.This month, Coinbase agreed to acquire The Clearing Company, a prediction markets startup it had already invested in.Coinbase, which was active in lobbying the U.S. government for more permissive crypto regulation, appears to have made defending prediction markets a priority. The company has sued three U.S. states as part of a push to assert that prediction markets fall under the jurisdiction of the CFTC, not state gaming regulators.Prediction markets letting users wager on sports have drawn scrutiny from some state regulators. Next year could prove formidable for prediction markets as the types of event contracts swell, which will quite possibly rub some people the wrong way.The NCAA blasted Kalshi in December for seeking permission to list a market where people would bet on whether or not college athletes would look to transfer schools. Prop bets, already drawing criticism in sports betting, could emerge as another battlefront.Robinhood recently rolled out ways for users to make prop bets by letting customers wager on the performances of individual NFL players in real time.While sports is a growth area bound to attract a lot of attention and allows some companies to service customers in states where online gambling is not allowed, according to a report from investment firm Keyrock, volume growth across prediction platforms is mainly being driven by activity in "non-sports categories" such as economics and "tech & science."Controversial mention marketsThen there are so-called "mention markets," bets that allow users to wager on what business leaders or public figures might say.Coinbase CEO Brian Armstrong drew attention to the category in October when, at the end of a conference call, he purposefully blurted out "Bitcoin, Ethereum, blockchain, staking and Web3," triggering payouts for traders who had wagered that he would mention those specific crypto-related terms.Some were not amused by the CEO's antics."You need your head examined if you think it’s cute or clever or savvy that the CEO of the biggest company in this industry openly manipulated a market," said Jeff Dorman, chief investment officer at Arca.While mention markets remain relatively small — a mere $84,000 was wagered on what Armstrong would say during the October call — compared to high-profile events like elections and sports, they could still prove problematic, especially for advocates keen to avoid having the emerging market's reputation tarnished."We think that type of market could open itself up to manipulation," said Robinhood’s Mackenzie.XO Market's Habbabeh agreed, suggesting that social media activity — particularly from Elon Musk — may have decided who won and who lost on Polymarket. He pointed to an instance where he observed Musk posting multiple tweets shortly before a market deadline, which meant the threshold was met and the bet paid off for those who wagered the tech billionaire would hit a certain tweet target.While Habbabeh said he wouldn't put it past Musk himself also wagering on his own tweet count, he admits it could just be an ego thing."Maybe he just wants to be the god," he said. "He's the god of that market, because he can decide where the market goes."Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2025 The Block. 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