Growth in prediction markets is surging as traders seek more precise ways to price and hedge discrete events, from elections to central bank rate decisions, without relying on blunt proxy trades. According to a report from U.S. bank Citizens, prediction markets are now running at an annualized revenue rate above $3 billion, up from about $2 billion in December, and could reach $10 billion by 2030.
The bank cited accelerating volumes, stronger market structure, and early institutional engagement, noting the trajectory mirrors the early evolution of listed derivatives and digital assets. "We continue to view ~$10 billion of annual industry revenue by 2030 as a reasonable medium-term waypoint rather than an end state," wrote analysts led by Devin Ryan.
Prediction markets have rapidly moved beyond niche betting to a growing ecosystem of sophisticated trading platforms that aggregate real-world event probabilities. Leading players include Kalshi, a CFTC-regulated U.S. exchange for event contracts, and Polymarket, one of the largest decentralized markets covering politics, sports, and economics. These platforms are drawing significant volume and attention from mainstream finance and regulatory bodies alike.
January volumes rose more than 40% from December, with February tracking at a similar pace despite expectations of a post-football slowdown. While sports remain a key liquidity driver, activity is broadening into macroeconomic, political, and regulatory events, areas more aligned with institutional demand.
Citizens analysts argue that asset classes typically scale from retail-led liquidity to professional market makers and, eventually, institutional capital, driving a step-change in depth and sophistication—a path prediction markets are now following. Institutional participation is emerging first through data integration, liquidity provision, settlement standards, and regulatory clarity, with direct trading expected to scale as infrastructure matures.
Prediction markets allow investors to hedge discrete event risk, from inflation surprises to M&A approvals, without relying on proxy instruments such as index futures or options, thereby reducing basis risk. By isolating specific outcomes, they provide targeted risk transfer and real-time, capital-weighted probability signals.
While revenues today are largely transaction-driven, the bank's analysts see future growth in data, research, and financing services as the ecosystem develops.
