- Citizens Financial Group projects prediction markets revenue to increase fivefold from current $2 billion annual run rate to exceed $10 billion by 2030.
- Managing director Devin Ryan notes institutional capital entering the sector will drive growth, with platforms Kalshi and Polymarket already processing $10 billion in monthly volumes.
- Regulatory uncertainty remains the primary obstacle, particularly jurisdictional tensions between US federal and state authorities over sports-linked markets.
Prediction markets could generate more than $10 billion in annual revenue by 2030, according to a new report from Citizens Financial Group, as institutional capital begins entering the sector at scale.
The forecast represents a fivefold increase from current revenue levels. Citizens estimates that prediction market companies are already approaching a $2 billion annual run rate based on per-contract fees, with monthly volumes reaching approximately $10 billion across leading platforms including Kalshi and Polymarket.
Institutional adoption to fuel growth trajectory
Devin Ryan, managing director at Citizens, observed that prediction markets appear positioned to become a durable and high-growth component of global capital markets and financial architecture.
“Their economic significance is ultimately rooted in the same principle that drove the growth of options and derivatives over the past 50 years — when investors can express views more precisely, markets become more efficient,” he stated in the Citizens report.
The report argues that prediction markets address a longstanding market inefficiency by enabling investors to express opinions on specific events without the cross-factor basis risk inherent in traditional hedging instruments.
Binary contracts tied to economic indicators, regulatory decisions, or merger outcomes could provide cleaner hedges than sector ETFs or index options, according to the analysts.
Event-driven hedge funds could isolate deal, litigation, and regulatory outcomes without taking on beta or duration exposure. Macro funds could hedge inflation data and policy decisions directly. Quantitative firms could incorporate probability curves as high-signal inputs into their models.
Citizens suggested that by reducing basis risk, these contracts would likely expand overall hedging capacity rather than cannibalise existing derivatives markets.
Regulatory challenges pose near-term constraints
Regulatory uncertainty remains the primary constraint on growth, especially concerning jurisdictional tensions between US federal and state authorities over sports-linked markets. Several states have proposed strong anti-prediction markets policies, with some banning them altogether.
Last week, Suffolk County Superior Court Judge Christopher Barry-Smith questioned whether prediction market platforms should be allowed to operate in Massachusetts.
The judge raised concerns that Kalshi is offering unlicensed sports wagering and exposing an addictive product to consumers as young as 18.
Massachusetts has become the first state to seek a court injunction directly blocking Kalshi’s sports operations. The state argues that no matter how these products are labelled, they function as sports wagers and should fall under state gaming laws.
Grant Mailand, a lawyer for Kalshi, maintains that state gaming laws do not apply to its sports events contracts, arguing they are subject to the Commodity Futures Trading Commission’s exclusive jurisdiction under the Dodd-Frank Act. Judge Barry-Smith said he planned to rule in January.
Assistant Attorney General Louisa Castrucci argued that when Congress gave the CFTC oversight over swaps, it was focused on avoiding a repeat of the 2008 financial crisis, not introducing a form of sports bets.
Citizens cited liquidity fragmentation, insider information concerns, and outcome ambiguity as additional near-term obstacles to growth.
Following trajectory of earlier financial innovations
The report compared prediction markets to earlier financial innovations such as listed options, ETFs, and credit default swaps. All initially faced scepticism before becoming integral to market structure.
Prediction markets appear to be following a similar developmental trajectory, starting with retail participation before progressing to market maker involvement, regulatory formalisation, and eventual institutional integration.
Sports and entertainment currently anchor much of the retail liquidity, representing over half of global contract count. The analysts projected that non-sports markets covering macroeconomic events, regulatory actions, and corporate outcomes will grow faster and eventually represent the majority of notional value as institutions enter the space.
Ryan added:
“As brokerages, digital asset exchanges, and traditional financial institutions increasingly explore the space, we believe prediction markets will transition from primarily a speculative curiosity today (albeit rapidly growing) to a mainstream financial tool, becoming a widely used instrument for hedging, speculation, and informational insight.”
The report noted that current monthly volumes of $10 billion compare to more than $10 trillion in US equities markets. In November, Kalshi and Polymarket processed $10 billion in notional volume across 15 billion to 20 billion combined contracts.
Robinhood Markets has played a key role in accelerating adoption. Citizens estimates that trading on Kalshi contracts within Robinhood has become the fastest-scaling product in the company’s history, already accounting for approximately 10% of Robinhood’s total revenue. Robinhood launched its Prediction Markets Hub in partnership with Kalshi in March 2025.
The sector has seen substantial investment activity in recent months. Kalshi raised $1 billion at an $11 billion valuation in October 2025, whilst Polymarket secured a $2 billion investment from Intercontinental Exchange, owner of the New York Stock Exchange, at an $8 billion valuation.
Industry consolidation and mainstream adoption
The sector has moved towards consolidation and mainstream integration. Last week, Kalshi announced the formation of the Coalition for Prediction Markets alongside Crypto.com, with founding members including Robinhood, Coinbase, and Underdog. The coalition aims to promote federal regulation via the CFTC and defend against state-level restrictions.
Google has integrated real-time prediction market odds from Polymarket and Kalshi into Google Search and Google Finance, bringing crowd-sourced forecasts into mainstream finance tools. Major sports leagues have also entered partnerships, with the National Hockey League becoming the first major US sports league to license its trademarks to prediction markets.
The analysts indicated that prediction markets will eventually transition from primarily a speculative curiosity to a mainstream financial tool, as digital asset exchanges and traditional financial institutions continue to invest in the sector. Citizens estimates that legal gambling represents a $100 billion global market, providing context for the growth potential.
The outcome of ongoing regulatory battles, particularly in Massachusetts and other states challenging Kalshi’s operations, will likely shape the sector’s development and determine whether prediction markets can fulfil the revenue projections outlined in the Citizens Financial Group report.
