Polymarket transforms prediction markets into $25B monthly platform

Polymarket and its rival Kalshi processed $25 billion in combined trading volume in April, up tenfold from a year ago, as a loosely coordinated army of retail "sharps" outmaneuver Wall Street on everything from Fed rate cuts to Rotten Tomatoes scores.

The two largest prediction market platforms — Polymarket, a crypto-native exchange built on Polygon, and Kalshi, a federally regulated derivatives exchange — have become the primary venues for wagering on future events. Together, they processed roughly one-fiftieth of 1 percent of Nasdaq's monthly volume, according to platform data. Nearly 40 percent of American men between the ages of 18 and 34 have placed at least one trade, per industry surveys.

"Every dollar that I gain is someone losing — and there's just a lot of people joining, betting, losing and leaving," said a 25-year-old trader who goes by @Frosen, a graduate student who turned $200 into nearly half a million dollars last year. "And then there's a group of a couple hundred people consistently winning — and that's the story."

The surge follows a pivotal legal victory. In September 2024, Kalshi won its case against the Commodity Futures Trading Commission, opening the door to legal election betting in the United States. Polymarket, which had relocated to Panama after a 2022 CFTC enforcement action, purchased a federally licensed derivatives exchange and clearinghouse in July 2025, securing CFTC approval to serve U.S. customers on select markets. The platforms now offer contracts on sports, weather, economic data and — in Polymarket's case — thousands of crypto-native event contracts ranging from Bitcoin price targets to "Will Jesus Christ return before 2027?"

The rise of prediction markets represents a structural shift in how financial markets price uncertainty. Unlike traditional polling or analyst surveys, every position on Polymarket or Kalshi is backed by real money, creating what economists call "truth-seeking" price discovery. A February working paper by three economists found Kalshi traders were as accurate as professional forecasters at predicting unemployment, inflation and Fed rate decisions — and offered continuously updated prices where no comparable financial instrument previously existed.

The sharps are winning — for now

The most successful traders on these platforms — known as "sharps" — operate in private Discord servers and Slack channels, pooling intelligence and coordinating trades. One group called MAGA Kiwi Club, a dozen or so traders who met online, recently spent a weekend knocking on doors in Texas to poll voters ahead of the Democratic Senate primary, wagering more than $1 million on the outcome. They won roughly $200,000.

Individual traders have posted extraordinary returns. A college student using the handle @JesterTheGoose turned $2 into more than $150,000 by deploying machine learning to predict Chess World Championship outcomes. @PrinceHal, a struggling screenwriter turned full-time Kalshi trader, has generated $3.7 million in lifetime profits by building inflation-forecasting models that consistently outperform major financial institutions. "Me and the banks are doing the same thing," he said. "They can't beat an acting major in a garage with Excel."

But the window for outsized returns may be closing. Susquehanna International Group, one of Wall Street's largest trading firms, already operates a prediction market desk on Kalshi as a market maker. The New York Stock Exchange's parent company has invested $1.6 billion into Polymarket. Prime brokers including Clear Street and Marex are building hedge fund access to Kalshi. Jeff Yass, Susquehanna's co-founder, said the firm is actively trying to recruit sharps. "You'll have less risk — we can give you a guaranteed salary, we can give you health care," Yass said. "Together we can bet bigger."

Regulatory crosswinds and insider trading risks

The rapid growth has attracted scrutiny. In April, federal prosecutors charged Master Sgt. Gannon Ken Van Dyke with using classified nonpublic information to profit from Polymarket bets on the capture of Venezuelan President Nicolas Maduro. Israeli officials arrested several people accused of using classified information to place Polymarket bets on military operations. A data-analytics firm told CBS News it identified a cluster of Polymarket accounts that made $2.4 million betting almost exclusively on U.S. military operations.

In May, a Google software engineer named Michele Spagnuolo was charged with insider trading on Polymarket, accused of making more than $1 million betting on one of last year's most popular Internet searches using confidential information accessed through his role at the company.

Regulators in more than a dozen U.S. states have sued Kalshi, issued cease-and-desist letters or filed criminal charges for allegedly operating an illegal gambling business. Minnesota became the first state to ban prediction markets outright on May 19; the Trump administration is suing the state in response. A state court in Nevada has also banned Kalshi. In March, former Trump acting chief of staff Mick Mulvaney started a group called Gambling Is Not Investing, arguing that event contracts on sports are indistinguishable from sports bets.

Both platforms have hired Washington lobbyists and invested in compliance infrastructure. Kalshi said it uses AI to flag suspicious accounts. "It's against our policy and it may be illegal to lie in a Kalshi investigation, just like it's illegal to lie to a court," a Kalshi spokesperson said. Polymarket has said it is cracking down on insider trading, though traders in private chat rooms told the New York Times that insider trading remains widespread.

What comes next

The question of whether prediction markets are regulated financial exchanges or illegal gambling operations will likely be settled by the U.S. Supreme Court. The CFTC under the Trump administration has taken a friendly stance toward the industry, which has deep ties to the Trump family. But a change in administration in 2028 could reverse that posture.

For the sharps, the existential threat is not regulation but competition. "All the sharps I know are worried about the growth that could bring in people smarter than us," said a trader known as @Car, who has made more than $1.3 million. "I'm gonna stop doing this the moment I start being wrong more than I'm right," PrinceHal said.

Caleb Davies, an IT professional from Minneapolis who turned $14,000 into more than $500,000 trading on Kalshi, said he is not worried. "I could hold my own against anyone on Rotten Tomatoes markets," he said. "I have two years of data they wouldn't have access to, plus all the experience. We'll be fine. The bad traders won't."

This article is for informational purposes only and does not constitute investment advice.