Prediction Markets Go Mainstream
Andrew Lawrence@alawrence2p
The idea
I think prediction markets are moving from niche to mainstream, with the trading volume and revenue to prove it. I own the retail platforms leading the charge, the exchange owners backing the infrastructure, sportsbooks pushing in, a fund with pre-IPO exposure, and the data suppliers everyone needs, while keeping a cash buffer and avoiding any single name dominating the basket. I'm watching the regulatory fight over who gets to oversee sports contracts closely, since that's the main thing that could change my mind.
What will be bought
- These brokerages are where regular people actually place prediction trades, and they keep a cut of every one. · Robinhood MarketsIt has turned prediction trading into a meaningful revenue stream among its retail users, proving regular people will trade event contracts alongside stocks and crypto., Coinbase GlobalIt is moving into prediction markets through Kalshi, letting its crypto users trade event contracts and adding a new revenue category., Interactive Brokers GroupIt owns and operates its own prediction exchange, earning from both sides as customers trade event contracts on its platform.33%
- The big exchange companies own stakes in prediction platforms or clear event contracts, so they earn as volume grows whoever wins the app war. · Intercontinental ExchangeIt backs Polymarket, one of the two largest prediction platforms, so it gains as event contract volumes climb across the industry., CME GroupIt clears event contracts behind the scenes and earns fees as volumes grow, regardless of which platform ultimately dominates the space., Cboe Global MarketsIt is entering the event contracts market, adding another established exchange player and creating a new profit center if trading volumes shift to regulated exchanges.22%
- Most prediction volume is sports, and the two biggest US sportsbooks are spending heavily to win it, including in states without legal betting. · DraftKings Inc.It is using prediction contracts to reach sports customers in states where traditional sports betting remains illegal, building a new revenue stream., Flutter EntertainmentIt owns FanDuel, which is building prediction products to convert its massive sports customer base into event contract traders.18%
- Kalshi and Polymarket are the leaders but still private, and this fund is the closest way to own a piece of them now. · Prediction market ETFIt holds direct stakes in the two largest pure prediction market companies before they become public, providing exposure to the category leaders.9%
- Every sports contract needs official game data and integrity monitoring, which these companies sell to all the platforms. · Genius SportsIt supplies official league data that prediction platforms need to settle sports contracts fairly, so it earns as more platforms launch., Sportradar GroupIt provides the official game data required to settle sports event contracts, and prediction platforms across the market pay for that coverage.8%
- Cash10%