As of January 22, 2026, the global financial landscape is undergoing a fundamental transformation. What was once a niche corner of the internet for political junkies and hobbyist forecasters has evolved into a powerhouse of the modern economy. Prediction markets—increasingly rebranded by Wall Street as "event trading"—are no longer just a curiosity; they are becoming the primary tool for price discovery and risk management in an increasingly volatile world.

The industry is currently riding a wave of unprecedented momentum. Following a series of landmark regulatory victories and a massive surge in retail participation throughout 2025, analysts are now painting a staggeringly bullish picture for the future. Leading the charge is Piper Sandler, which recently released a research note suggesting that the prediction market industry is on track to reach a total addressable market (TAM) of $100 billion within the next decade. With a projected annual growth rate of 47%, the transition from "alternative data" to "mainstream asset" is occurring at a pace that few in traditional finance anticipated.

The Market: What's Being Predicted

The focus of prediction markets has shifted from the "big event" cycle to a persistent, high-frequency trading environment. While the 2024 U.S. Presidential Election served as the industry's "Big Bang," the market in early 2026 is defined by its breadth. Traders are no longer just betting on who will win the White House; they are trading contracts on Federal Reserve interest rate hikes, monthly CPI data, Academy Award winners, and—most significantly—daily sports outcomes and micro-economic indicators.

Currently, the market is dominated by two distinct titans. Kalshi, the primary U.S.-regulated exchange, reached a valuation of $11 billion in late 2025. It currently processes a significant portion of domestic regulated volume, offering everything from climate-related event contracts to "recession" markets. On the decentralized side, Polymarket has seen its valuation climb toward $15 billion after securing strategic investment from the Intercontinental Exchange (NYSE: ICE). Collectively, these platforms and their peers are expected to facilitate the trade of over 445 billion contracts in 2026, representing roughly $222.5 billion in notional volume—a massive leap from the 95 billion contracts recorded in 2025.

Why Traders Are Betting

The 47% annual growth rate is being fueled by a "flywheel effect" involving regulatory clarity, technological integration, and the quest for objective truth. A series of federal court rulings in late 2024 and 2025 fundamentally altered the legal landscape by establishing that event contracts are regulated financial swaps rather than gambling products. This distinction has opened the floodgates for institutional capital, which now uses these markets to hedge against "black swan" events that traditional derivatives fail to cover.

Furthermore, the "sports flywheel" has become the industry's primary volume engine. In 2025, sports-related contracts accounted for over 90% of trade frequency on major platforms, as bettors transitioned from traditional "fixed-odds" sportsbooks to the more transparent, peer-to-peer pricing of prediction markets. Traders are also increasingly utilizing AI-driven tools to filter noise and capitalize on market inefficiencies. This move toward sophisticated trading strategies has attracted a new class of "quant" traders who treat prediction markets with the same rigor as the options or futures markets.

Broader Context and Implications

The most significant driver of the $100 billion projection is the "Distribution Unlock"—the integration of prediction markets into mainstream financial and betting applications. Robinhood (NASDAQ: HOOD) has led this charge, with event trading becoming its fastest-growing product line by revenue in early 2026. By acquiring the CFTC-licensed exchange and clearinghouse MIAXdx, Robinhood now allows its millions of users to trade event contracts natively within the same app where they buy stocks and crypto.

Other major players are following suit. Interactive Brokers (NASDAQ: IBKR) has expanded its "ForecastEx" platform globally, positioning event contracts as essential hedging tools for sophisticated investors. Even traditional news outlets like CNN and financial data providers like Google Finance have begun integrating prediction market tickers into their standard coverage. This shift reflects a growing public sentiment that "crowd-sourced probabilities" are more accurate than traditional polling or expert punditry, especially in a world where data fragmentation makes traditional forecasting difficult.

What to Watch Next

As we look toward the remainder of 2026, several key milestones will determine if the industry can maintain its 47% CAGR. The most immediate factor is the continued expansion of event trading into the "everyday" apps used by retail investors. Watch for Coinbase (NASDAQ: COIN) to deepen its integration with Kalshi, potentially offering prediction markets as a core "on-ramp" for its international user base.

Regulatory developments in Europe and Asia will also be critical. As the U.S. model for regulated event trading proves successful, other jurisdictions are likely to follow, potentially unlocking billions in additional liquidity. Additionally, the development of "negative event" insurance—where businesses use prediction markets to hedge against specific supply chain disruptions or local political instability—could represent the next major frontier for institutional adoption.

Bottom Line

The rise of prediction markets represents a shift in how society processes information and manages risk. The Piper Sandler projection of a $100 billion industry is not just a reflection of growing trading volumes; it is a testament to the power of the "wisdom of the crowds" in a digital-first economy. By incentivizing accuracy through financial stakes, these markets provide a level of clarity that traditional media and polling have struggled to maintain.

For investors and traders, the message is clear: prediction markets have moved from the periphery to the center of the financial world. Whether through the direct trading of event contracts or through the stocks of the companies building this infrastructure—such as Robinhood (NASDAQ: HOOD), Interactive Brokers (NASDAQ: IBKR), and StoneX Group (NASDAQ: SNEX), the owner of FOREX.com—the opportunities for growth are immense. As we move deeper into 2026, the $100 billion horizon looks less like a distant dream and more like an inevitable reality.

This article is for informational purposes only and does not constitute financial or betting advice. Prediction market participation may be subject to legal restrictions in your jurisdiction.

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