Kalshi Eats 89% of US Prediction Markets While Regulators Argue If It's Trading or Just Gambling With Extra Steps

Prediction markets are having their awkward "look at me, I'm a real industry now" phase in the U.S., according to a fresh Bank of America report that nobody asked for but everyone needed.

Total weekly volume crept up 4% week-over-week, proving these markets can do math when they want to. Kalshi — the federally regulated exchange playing the responsible adult at the party — led the charge with a 6% gain. Crypto.com posted a modest uptick, while Polymarket, the crypto-native darling that had been absolutely destroying it in prior weeks, saw volumes drop 16%. Ouch. Someone's algorithm needs a pep talk.

But here's where it gets wild: Kalshi now commands roughly 89% of measured U.S. prediction market volume. Polymarket sits at 7%, and Crypto.com holds a humble 4%, per BofA estimates. So basically, for every Polymarket degens loading up on "will Congress recognize Bitcoin as a food group," there are 12 Kalshi users placing contracts that CFTC would actually shake hands on.

The split tells a familiar tale: clearer regulatory footing wins in the current environment, like a well-dressed man at a crypto conference.

At the heart of the issue is the age-old question nobody can agree on — are prediction markets financial instruments or just gambling in a fancy suit with better lawyers?

Kalshi operates under CFTC oversight, positioning its contracts — including political and sports outcomes — as derivatives. Polymarket runs on blockchain rails and has historically kept its distance from U.S. regulators like a cat avoiding a bath. It pulls in global liquidity but faces domestic headwinds that would make even the most diehard degen sweat.

Regulators are stepping in with opinions, and by opinions we mean lawsuits and injunctions.

Nevada and Massachusetts both secured preliminary injunctions against Kalshi at the state level. New Jersey struck out on appeal, limiting its ability to apply gambling laws to the firm. Meanwhile, the CFTC has been aggressive in defense of prediction markets, suing multiple states and arguing federal law should preempt state gambling rules. The agency also drew a firm line between sports betting — entertainment, in their view — and event contracts, which it classifies as financial hedging tools. Because calling