Prediction markets are rapidly moving into the mainstream as trading volumes surge and major digital platforms embrace probabilistic forecasting, Ivan Montik, Founder, SOFTSWISS, says this raises urgent questions around regulation, consumer protection and market oversight.
Prediction markets have gone mainstream and can no longer operate in the shadows. What was once a niche intersection of finance, gaming and academic experimentation has become a fast-growing consumer-facing category. Now regulation needs to catch up, but how?
In simple terms, prediction markets allow people to bet on the probability of virtually any event, from presidential election results to rainy weather, and millions of people are starting to log on to place their bets. Global trading volume for prediction markets reached approximately US$64bn in 2025, up from less than US$16bn just one year earlier, with monthly activity increasing more than 100-fold over a two-year period, Next.Io’s calculations reveal. In 2026, annual trading volume is on track to top US$240bn with a likelihood of reaching US$1tn by the end of the decade, according to Bernstein estimates cited by Forbes.
During major events like presidential elections or big games such as the World Cup Final or Super Bowl Sunday, single-day volumes can jump past the US$1bn mark. It’s clear that prediction markets are no longer operating on the edges, having firmly entered the mainstream, fuelling the expansion of operators like Polymarket.
Embedding in popular platforms
Crucially, growth is being driven not only by standalone platforms but by the integration of prediction market functionality into some of the world’s most popular digital platforms. Robinhood, a leading app for US retail investors, has positioned prediction markets as one of its fastest-growing product lines. Robinhood CEO Vlad Tenev said prediction markets are entering a “supercycle” that could eventually drive trillions of dollars in annual trading volume, as the company’s recent earnings report showed them contributing meaningfully to revenue growth with activity reaching record levels.
Outside of fintech, prediction-based communities and tools are proliferating on messaging platforms such as Telegram, where real-time information sharing, trading signals and probabilistic forecasting are increasingly intertwined. Elsewhere, crypto exchanges and even traditional betting operators are moving into the space, signalling a wider convergence of financial services, media and gaming.
For example, our company has recently rolled out SOFTSWISS Prediction Markets – a fixed-odds B2B solution that enables online gaming operators to plug it into their existing product stack to let players wager on the binary outcomes of real-world events spanning politics, economics, technology and culture.
This so-called mainstreaming across industries brings some benefits. Prediction markets can aggregate dispersed information, provide real-time sentiment signals and, in some cases, even offer more accurate forecasts than traditional polling or expert opinion.
It also has important implications for the technology sector because prediction markets represent a shift in how information is produced, distributed and monetised. As probabilistic forecasting becomes embedded in everyday platforms, users transition from being passive consumers of information to becoming active participants who are financially exposed to outcomes.
The risks of mainstreaming
However, going mainstream also exposes a significant structural problem: regulation has not kept pace with the rise of prediction markets’ popularity. Safeguards still need to be put in place to combat risks such as amplifying speculation, distorting behaviour and eroding trust, to name just a few.
While the need to regulate prediction markets is clear, it has been challenging to do because of their fast expansion and the wide range of sectors they straddle. Prediction markets do not sit comfortably within any existing regulatory category. For example, they resemble financial derivatives, as contracts are traded based on expected outcomes. They mirror sports betting products, as outcomes are uncertain and often event driven. At the same time, they function as information markets, producing probabilistic signals about the future.
Each of these categories is governed by different frameworks. In the United States, derivatives fall under the Commodity Futures Trading Commission, while gambling is regulated at state level. In Europe, even within the European Union, financial and betting regulations are similarly fragmented.
This category problem creates uncertainty for operators, investors and users while complicating enforcement. Applying financial regulation alone, for example, risks missing some important consumer protection concerns or the informational value of prediction markets. A hybrid approach, meanwhile, risks leaving gaps in oversight.
Recent regulatory attempts
In April 2026, the US Senate addressed concerns about prediction markets’ potential to influence real-world outcomes relating to elections, geopolitical developments and public policy by banning lawmakers and staff from participating, citing risks of insider trading and conflicts of interest, according to Reuters.
Rather than trying to come up with piecemeal solutions, however, it would make more sense to bring regulation for prediction markets in line with iGaming, also known as online gambling. This industry experienced a similarly meteoric rise when rapid digitisation during the Covid pandemic fuelled its expansion, but regulation could not keep pace.
Fast forward to today, and jurisdictions such as Ontario, Canada and Estonia have taken a common-sense approach to regulating iGaming, including online sports betting. In many places, the sector has moved towards more structured business-to-business (B2B) models, anchored in licensing, compliance and operational transparency. Clear regulation has helped strengthen consumer protections while ensuring industry players are operating legally, adhering to high standards of conduct and paying tax into government coffers.
In contrast with iGaming, many prediction market platforms still operate around the world without being embedded in local licensing frameworks and regulatory regimes. The absence of such structures makes supervision difficult, amplifies risks for consumers and creates opportunities for regulatory arbitrage.
Lessons learned from iGaming
I believe that moving from loosely structured peer-to-peer environments towards more accountable platform-based models, which are regulated similarly to iGaming, can address many of the current risks. This would include a requirement for prediction market providers to introduce robust know-your-customer (KYC) processes, transaction monitoring, market surveillance and clear governance structures.
While this approach does not eliminate all risk entirely, it makes it manageable. It also enables a more constructive relationship between industry and regulators. Rather than reacting to crises, regulators can engage proactively with operators, setting standards that support both innovation and consumer protection.
The experience of iGaming suggests that waiting for clarity as prediction markets continue to develop and grow at breakneck speed is not an option. The task for regulators and industry is to move from ambiguity to structure before the risks become systemic.
Once prediction markets become even more embedded in the digital economy, the cost of getting regulation wrong will be significantly higher than it is today.
