Opinion: The U.S. Prediction Market Sparks a Boom but Faces Bubble Risks: Regulatory Battles and Liquidity Bottlenecks as Key Variables

Odaily Planet Daily reports that analysts point out the prosperity of the prediction market in the United States is built on an unstable foundation, mainly benefiting from regulatory arbitrage opportunities. For example, currently, no states in the U.S. have a comprehensive system to regulate users participating in sports betting through prediction markets. Dune Analytics data shows that in 2025, sports trading accounts for about 85% of Kalshi’s trading volume, and Polymarket accounts for approximately 39%. Devin Ryan, Head of Financial Technology Research at Citizens Bank, believes that the market needs to establish comprehensive integrity rules, and trading volume in non-sports markets needs to increase. Currently, the market size for predicting January CPI inflation data on Kalshi is less than $1 million, and the core inflation prediction market size is less than $30,000. Such liquidity is insufficient to attract institutional participation.

Additionally, the U.S. prediction market currently exhibits characteristics of “fragile prosperity,” with growth mainly relying on regulatory gray areas and substantial marketing investments. If regulations tighten or user interest declines, growth could face pressure. There is also a certain game of negotiation among regulators. For example, U.S. prediction markets typically claim to be regulated by the Commodity Futures Trading Commission (CFTC) as event contract trading, but state-level regulators are more cautious. Related legal disputes may ultimately be decided by the Supreme Court. (BusinessInsider)