According to a report by Eilers & Krejcik Gaming, a research and consulting firm based in California, prediction markets could become a $1 trillion industry in the US despite the increasing pressure from states on companies offering such products.
Eilers & Krejcik Report Paints an Optimistic Picture
In a report called “U.S. Prediction Markets: How Big, How Fast, What’s Next?” that prediction markets could become an important catalyst for reshaping both the betting and trading industries, potentially blurring the line between the two. However, the report also warned that numerous risks, unknowns, and uncertainties lie along the path forward.
Eilers & Krejcik said in its $1 trillion trading forecast that sports prediction events would account for $435 billion. In comparison, financial and crypto predictions would make up a $310 billion market, followed by $160 billion tied to news-related issues, $40 billion to culture, and $55 billion across other topics making up the rest.
This highlights the fact that prediction markets are introducing new contract products similar to sportsbook parlay bets. A parlay is a single wager that combines two or more individual bets into one. To win, every selection must be correct. Parlays are attractive to players because they offer higher payouts, as the odds for each leg are multiplied together. This creates a higher-risk bet in which all components must hit.
As Prediction Markets Grow, Regulatory Questions Remain
While Eilers & Krejcik’s report paints a positive financial picture for the growth of prediction markets over the next few years, more questions remain. One asks if online sportsbook operators will switch to prediction markets. The report states that doing so could lower costs of revenue, and potentially bring a differentiated product to the prediction market sector.
According to the report, there are multiple factors that could influence this. These include unsustainable state gaming tax rates, unclear gambling regulations, and even a more permissive Commodity Futures Trading Commission under the current Trump administration.
Questions also remain regarding the revenue from non-sports events. While the report did give some estimates on that, it also said that there is no compelling case for prediction markets without a significant contribution to the total addressable market from non-sports categories. “We could easily fill an entirely separate report attempting to answer that question, and we may do that at some point,” the report stated.
Another unknown remains the way states and regulators will react to an ever-growing prediction markets scene. Right now, multiple legal battles are going on in the US between companies and regulators. Just a few days ago, for example, Tennessee authorities intensified their campaign against sports-related prediction markets, such as Kalshi and Polymarket, accusing them of operating wagering products without meeting the required licenses.
