Opinion: US Prediction Markets See Boom but Face Bubble Risks: Regulatory Battles and Liquidity Bottlenecks Emerge as Key Variables

Odaily News Analysis points out that the prosperity of the US prediction markets is built on an unstable foundation, primarily benefiting from regulatory arbitrage opportunities. For instance, there is currently no comprehensive system in various US states to regulate user participation in sports event betting through prediction market formats. Dune Analytics data shows that in 2025, sports-related transactions accounted for approximately 85% of Kalshi's trading volume and about 39% of Polymarket's. Devin Ryan, Head of Financial Technology Research at Citizens Bank, believes the market needs to establish robust integrity rules, and trading volume in non-sports markets needs to increase. Currently, the market size for predicting January CPI inflation data on Kalshi is less than $1 million, and the market size for predicting core inflation is under $30,000. Such liquidity is insufficient to attract institutional participation.

Furthermore, the current US prediction market exhibits characteristics of "fragile prosperity," with growth heavily reliant on regulatory gray areas and significant marketing investment. Once regulations tighten or user interest wanes, growth could face pressure. There is also a degree of regulatory contention. For example, US prediction markets typically argue that they fall under event contract trading regulated by the Commodity Futures Trading Commission (CFTC), but state-level regulators adopt a more cautious stance. Related legal disputes may ultimately be decided by the Supreme Court. (BusinessInsider)