Prediction Markets Surge in 2025: Record Valuations, Mainstream Entry, and Regulatory Battles Define a Transformative Year

The year 2025 has solidified the position of prediction markets as a rapidly expanding sector, despite continuous regulatory scrutiny following their surge in mainstream attention during the 2024 US presidential election. This past year saw significant financial growth, strategic partnerships, and a notable shift in the broader gaming industry's approach to these platforms.

Leading the charge were platforms Kalshi and Polymarket, both achieving multi-billion-dollar valuations. Kalshi’s journey began with a $185 million funding round in July 2025, valuing the company at $2 billion. Hailing 2025 as its "breakout year," Kalshi later secured a $300 million Series D round amid international expansion, boosting its valuation to $5 billion. By early December, Kalshi reached an $11 billion valuation, reporting $1 billion in weekly trading volume and an eightfold growth since July, serving hundreds of thousands of active users.

Polymarket also saw substantial growth. Following a $2 billion funding round from Intercontinental Exchange, parent of the New York Stock Exchange, its valuation climbed to an estimated $9 billion to $10 billion. The company is reportedly in early talks that could push its valuation to $12 billion-$15 billion. Polymarket further strengthened its position by obtaining a Commodity Futures Trading Commission (CFTC) license, enabling its relaunch in the United States.

Kalshi also pursued mainstream integration through partnerships with U.S. TV networks CNN and CNBC. These collaborations aimed to supply prediction data for quality journalism and early trend identification. Kalshi CEO Tarek Mansour emphasized integrating market-driven predictions into financial reporting, moving "from data about what’s happening now, to real-time forecasts about what’s happening next." Dedicated tickers displaying Kalshi data on these networks significantly bolster its public appeal.

However, regulatory bodies remained vigilant. The Nevada Gaming Control Board (NGCB) warned of "prediction casinos" and ordered Kalshi to cease sports event contracts. While Kalshi initially won a temporary stay, federal judge Andrew Gordon later overturned it, favoring the regulator. Other jurisdictions followed suit: on December 4, the Connecticut Department of Consumer Protection issued a cease-and-desist to Kalshi for unlicensed sports wagering. In September, Massachusetts Attorney General Andrea Joy Campbell filed a lawsuit in Suffolk Superior Court, alleging illegal online sports wagers. Conversely, in April, a New Jersey court granted Kalshi a preliminary injunction, allowing it to continue offering sports event contracts despite a cease-and-desist from the New Jersey Division of Gaming Enforcement.

A surprising development was the bold entry of mainstream sports betting companies into prediction markets, often in defiance of traditional regulatory stances. DraftKings acquired CFTC-licensed exchange Railbird in October. FanDuel launched its standalone "FanDuel Predicts" app on December 1, initiating a multi-jurisdictional strategy. Fanatics made a sudden announcement, rolling out sports, politics, and culture prediction markets in 24 states. Underdog, however, canceled its Missouri launch, likely due to state opposition. Further demonstrating this divergence, DraftKings and FanDuel resigned their Nevada licenses in November and withdrew from the American Gaming Association, reportedly over disagreements on embracing prediction markets.

In conclusion, 2025 was a transformative year for prediction markets. Despite widespread regulatory opposition, major platforms like Kalshi and Polymarket achieved record-breaking growth and visibility, while traditional betting giants signaled a new era by actively entering and shaping this evolving landscape.