Prediction Markets Hit $188B as Kalshi Sports Betting Overtakes Polymarket

Prediction market volume hit a record $188B between July and September 2026. The surge represents a nearly 70% increase from the previous quarter and a 21x jump compared to Q3 2025. Kalshi drove the massive growth to permanently pull ahead of rival Polymarket in mid-April. Sports trading accounted for 40% of Kalshi's Q3 trading volume and topped $58B in June and July alone. The $188B figure measures total contract payout potential based on a $1 notional value, not the actual capital spent. Buyers deployed approximately $41B to acquire $142B in Kalshi contracts last quarter. Retail traders took heavy losses across the ecosystem. Analysis of Polymarket accounts run by actual humans instead of bots revealed 69.2% of 2.9 million retail users finished below break-even, accumulating $338.9M in total losses since 2020. A federal appeals court sided with Ohio and Tennessee on September 25. The ruling officially classifies these sports contracts as gambling and allows states to restrict where Kalshi sells them. “69.2% of the 2.9 million ‘retail’ accounts… finished below break-even.” — Galaxy Research.