From the crypto world to Wall Street: Is the "prediction market" going mainstream?

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Once considered a niche experiment within the cryptocurrency community, prediction markets are now moving toward mainstream finance at an unprecedented pace.

The latest move comes from the world’s largest derivatives exchange. According to Bloomberg, CME Group Inc. plans to launch financial contracts tied to sporting events and economic indicators by the end of this year. This move will place CME in direct competition with emerging prediction market platforms such as Polymarket and Kalshi.

This action triggered an immediate market reaction. After the news was disclosed, the share price of DraftKings Inc., a competitor to FanDuel (which partners with CME for sports predictions), dropped as much as 3.8% in after-hours trading, while CME’s share price rose accordingly. Previously, crypto prediction market platform Polymarket had just secured a $2 billion investment from Intercontinental Exchange Inc., the parent company of the New York Stock Exchange.

From being satirized on the subculture cartoon "South Park," to real-time odds screens on the streets of New York, and even to strategic deployments by top Wall Street institutions, prediction markets are rapidly evolving from a marginalized financial tool into an emerging track that blends culture, finance, and information. Whether it can truly become the first decentralized finance (DeFi) application to achieve mass adoption has become the focal point of market attention.

“The mainstream army” enters — traditional exchanges make their move

The entry of traditional financial giants is the clearest signal that prediction markets are heading toward the mainstream.

According to media reports, CME plans to launch its new prediction contract products to the public through its futures commission merchants (FCMs), including organizations established in partnership with sports prediction platform FanDuel.

CME’s collaboration with FanDuel was announced earlier this year, initially focusing on products tied to economic indicators. But in an interview with Bloomberg in August, CME CEO Terry Duffy made it clear he was open to listing sports-related contracts, saying they were "operationally ready on day one."

CME’s advantage lies in its regulatory status. As an exchange regulated by the U.S. Commodity Futures Trading Commission (CFTC), CME has the power to "self-certify" new contracts without explicit approval from regulators, which may allow it to quickly promote new product launches. These actions show that traditional exchanges are no longer mere observers, but are ready to become core players in this emerging market.

Emerging platforms rise, data demonstrates popularity

Before the entry of traditional giants, emerging platforms represented by Polymarket and Kalshi had already built significant user bases and trading volumes through their innovative models and trending topics.

Polymarket is a crypto-based platform that allows users to use stablecoins to bet on the outcomes of real-world events such as elections and sports. The platform rose to prominence during the 2024 U.S. presidential election, setting new historical highs in activity and trading volume.

According to Dune data, its number of daily active wallets peaked at over 72,600 on January 19, 2025. Although activity has since receded, the platform remains robust, having processed over $1 billion in trading volume this month and with cumulative transactions surpassing $15.7 billion.

Another platform, Kalshi, took a compliant route and is America’s first event contract exchange regulated at the federal level by the CFTC.

Recently, Kalshi went viral on social media thanks to its real-time mayoral election odds screen in New York City, with related videos on X being viewed nearly 13 million times. The platform has even appeared in the well-known cartoon "South Park," showcasing its cultural influence. By tapping into the public’s interest in trending events, these platforms have successfully brought prediction markets to a wider audience.

Capital infusion and regulatory battles

Capital inflows and regulatory breakthroughs together are paving the way for prediction markets to go mainstream. One of the most eye-catching deals is Intercontinental Exchange, the NYSE’s parent company, announcing a $2 billion investment to acquire a 25% stake in crypto prediction market Polymarket. Although Polymarket is not yet open to U.S. users, it acquired a CFTC-regulated exchange earlier this year and plans to launch in the U.S., with its valuation potentially reaching as high as $10 billion.

On the regulatory side, Kalshi last year won a court case against the CFTC, clearing the way for it to offer U.S. presidential election betting contracts domestically. Since then, Kalshi and similar companies have leveraged their federal financial licenses to offer sports betting-related services nationwide, though this move still faces resistance from some state gambling regulators and legal uncertainties regarding market manipulation and other issues.

However, the regulatory environment remains complex. For example, some state gambling regulators have stated they will not allow casinos under their jurisdiction to offer federally regulated event contracts at the same time. FanDuel’s spokesperson also responded cautiously, saying the company is maintaining “active dialogue with stakeholders including state regulators” as it co-develops products with CME.

“Simplicity” may be key to mass adoption

Why are prediction markets attracting so much attention now? Mike Rychko, an infrastructure researcher at Azuro, believes the key is their unparalleled “simplicity.” He points out that prediction markets turn complex probability forecasts into simple, intuitive data points—such as “candidate X has an 87% chance of winning”—which anyone can understand.

“Most people will never open an account at a derivatives exchange,” Rychko wrote, “but they crave a clean, easy-to-understand signal.” He believes this intuitiveness gives prediction markets a greater chance of achieving mass adoption ahead of other complex DeFi products.

The data makes this appeal clear. According to DefiLlama, even though Polymarket’s total value locked (TVL) has dropped from a peak of nearly $512 million during the U.S. election to about $194 million now, it has still grown 2,325% from $8 million a year ago. This model, which combines cultural relevance with real-world financial participation, is proving its strong market vitality and may ultimately lead a new wave of financial products.

Risk Disclosure and DisclaimerThe market has risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Investment based on this is at your own risk. ```