The gambling revolution started around 2018, when platforms like DraftKings and FanDuel are riding a wave of state-by-state legalization, and the old stigma that separated professional sports and gambling is breaking down. Long feature of soccer in Europewith gambling sites that sponsor football club’ kits, the Paddy Powerization of America led to gambling partnerships with sports brands including ESPNTHE NBAand the NFL.

now, data from Wall Street analysts and industry researchers suggests that the sportsbook’s grip is weakening as Americans flock to “event contracts” on exchanges like Kalshi and its crypto-native rival Polymarket, which allow users to bet on everything from playoff results to interest rate cuts and presidential politics. In Kalshi, contracts related to sports have moved from an experiment to the center of the business, with football alone accounting for almost 90% of trading volumes in recent months.‘

Super Bowl weekend showed just how far the transition has come. According to a Bank of America Global Research notes, Kalshi’s $871 million in notional numbers through and through Sunday is largely tied to the NFL game. Kalshi confirmed luck that the total amount of all game-related markets is more than $1 billion. According to BofA estimates, nearly a fifth of that action comes from parlays — multi-leg sequences familiar to sportsbook customers but now wrapped in the language of derivatives and trading. At the same time, DraftKings, Flutter Entertainment’s FanDuel, and other gambling stocks stumbled, forced by evidence that a significant fraction of the “handle” migrated to the prediction markets even during what should be the peak season for traditional books.

Kalshi’s business has grown from a niche prediction market to a multi-hundred-million-dollar-revenue, multibillion-dollar-volume exchange in just a few years, with growth rates in the triple and even quadruple digits. Estimated revenue grows from about $1.8 million in 2023 to about $24 million in 2024 (over 1,200% annually), then to about $260 million in 2025. The company’s valuation has risen to nearly $11 billion in late 2025 after a $1 billion funding round.

According to Kalshi, it differs from sports betting because of the way its exchange operates on a structural level. “Unlike a sportsbook, which takes the other side of every bet from customers, Kalshi is an exchange where people on both sides of trades can meet, similar to the way stock and derivatives exchanges work,” said a representative. luck. Where sports betting works like a casino, with everyone playing against “the house,” Kalshi says it works like the stock market, with customers trading against other customers, and importantly, Kalshi doesn’t win when its customers lose.

The rise of the prediction market

The appeal is part economic and part cultural. Kalshi and Polymarket position themselves not as casinos but as exchanges where users trade contracts that look and feel like financial instruments, with prices that move in real time and positions that can be opened and closed like stocks. Backers from Sequoia Capital to Founders Fund describe these platforms as “truth machines,” arguing that tying money to political and economic outcomes produces sharper predictions than polls or pundits. In practice, that high framing goes hand-in-hand with an age-old desire: the desire to sweat a game, an election, or even a popular rumor with money on the line.

In a recent podcast appearance on SoFis The Important Partattended by luckTom Lee of Fundstrat argues that prediction markets “are actually useful, because they are the closest thing to a crystal ball.” For users, however, he said it’s clearly “a form of gambling,” and there are social consequences to that. He argues that this is “a big innovation for the financial industry,” because it will help break down the act of buying stock into tokenized streams of income that will come in the future. “Then it’s a lottery ticket for you,” he said, because if that cheap option in the future loses, “you’ll make more money than buying the whole company” as a stock.

“Of course, with that innovation (and) speculation, it creates winners and losers. But that’s capitalism, right?” Lee noted that 90% of publicly traded companies since the 1970s have fallen in value by more than 50%, and another 90% of those have fallen to zero, meaning that 90% of 90% of stocks end up worthless.

Lee’s co-panelist, Michael Lewis, author of The Great Briefbeg to differ. “It sounds like a good thing,” he said. “But I don’t think the stock market is any better than it was before sports gambling became legal.” Lewis was amazed at “the way the country has recently turned its back on this subject” and highlighted the difference between state-controlled sports betting and prediction markets such as Kalshi and Polymarket, which are not.

Kalshi specifically surfs a regulatory situation that treats its offerings as CFTC-regulated”contract events,” is different from state-licensed gambling—though state regulators are confused by what looks, to many, like sports betting by another name. partnership with retail brokerage Robinhood which runs its markets directly into mainstream trading apps used by millions of Americans. On Sunday evening, Kalshi’s own mobile app briefly hit No. 2 spot in the US App Store, ahead of most social and entertainment majors, while DraftKings came in fifth—an indication of how quickly prediction markets are moving from niche curiosity to mass consumer product.‘

For Michael Lewis, even today’s sports leagues privately admit that sports gambling is “the work of the devil.” Noting all the sponsorships that fund sports broadcasting and leagues, Lewis said there is a major problem with the business model. “It’s now the main engine of growth. It’s hurting sports. It’s creating terrible incentives.” He lamented the wave of scandals, especially in college basketball, and predicted it would continue until prop betting is banned in college sports. In Lewis’s point, NCAA president Charlie Baker called on state gambling commissions this past January, urging them to adjust state laws and regulations to eliminate gambling on individual prop bets and other high-risk prop bets such as first-half unders. Hours earlier, federal prosecutors announced multiple charges in a sports betting investigation involving college basketball.

Kalshi previously responded to criticism from Baker by announcing that it is federally regulated, governed by the Commodity Exchange Act and its hundreds of regulations. “We as a company also have comprehensive internal policies to address issues of trading integrity and responsibility, including in-house and third-party surveillance systems that monitor trading activity,” Kalshi said. “We run Know-Your-Customer reviews on everyone who does business on our platform.”

Lewis said that he hopes that the government will finally come to this issue, “but we look back at a period of, it is not good for society. It is not fashionable to say that. Lewis said that he agrees with Lee that “prediction markets are good,” but when it comes to sports gambling, “society needs to take care of it. It’s going to ruin sports and ruin a lot of young men’s lives.”