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Prediction markets moved into the mainstream in the U.S. in 2025, with Kalshi and Polymarket expanding into sports-event predictions. The sports segment has been especially influential for Kalshi, where it accounts for about 85% of its activity.
Prediction markets let users buy and sell contracts tied to the outcomes of future events such as elections, sporting events, and economic indicators. The structure is similar to trading: if a user believes the Boston Celtics will beat the N.Y. Knicks, they can buy a contract reflecting that view, while other participants buy contracts based on their own probability estimates.
Each contract pays out $1 if the outcome occurs and $0 if it does not. Contract transactions can also incorporate different probability scenarios depending on the platform’s design.
Robinhood launched its prediction market last August and has described it as the fastest-growing new product in the company’s history. In its fourth-quarter earnings report, management said Robinhood had 12 billion event contracts traded, generating about $300 million in run-rate annual revenue.
In January, contract activity accelerated. Robinhood reported 3.4 billion event contracts traded, a 17% increase over December. If that pace continues, management indicated the annual run rate revenue could reach $435 million.
In the fourth quarter, prediction markets—reported in the “other” category—accounted for about $147 million in revenue. That represented roughly 12% of total revenue and nearly 19% of all transaction-based revenue.
DraftKings operates within a duopoly in online sports betting alongside FanDuel, which is owned by Flutter Entertainment. In December, DraftKings launched its own prediction market, which it said has already created a major revenue opportunity.
DraftKings’ prediction market is positioned to generate revenue in states where online sports betting is not legal, including California, Texas, and Florida. On the Q4 earnings call, CEO Jason Robins described it as “the most exciting new growth opportunity we have seen” since 2018.
While DraftKings has not yet provided prediction-market revenue figures, Robins said engagement around the NFL’s Super Bowl was substantial, with three times its previous daily record for trading volume. He also said predictions represent a $10 billion annual gross revenue opportunity in the coming years, adding: “Our goal is simple; we intend to lead the predictions category.”
DraftKings did not include prediction market revenue in its fiscal 2026 guidance, contributing to a lower-than-expected outlook. The stock has fallen 34% this year, according to the article.
However, the expectation is that prediction markets will drive revenue immediately, particularly in states where online sports betting remains illegal. DraftKings is also building its own exchange after acquiring the event contract exchange Railbird, with the Railbird-powered exchange planned to roll out this year.
Wall Street analysts cited prediction-market upside alongside a reduced valuation. The article notes a median price target of $35 per share for DraftKings, implying 54% upside from current levels.
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