Prediction markets such as Kalshi and Polymarket are fast becoming the frontier where finance tests the limits of probability. Long branded as “legalized gambling,” they now draw institutional and retail capital as regulators rush to define their perimeter.
Their ascent raises questions of legality and sustainability. These markets could mature into regulated risk-pricing tools — or remain trapped between speculation and finance.
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ICE Bets on Polymarket
Latest Update
Intercontinental Exchange (ICE), parent of the NYSE, is exploring a deal valuing Polymarket at $10 billion. Though unconfirmed, the talks would mark one of the first major crossovers between Wall Street and blockchain prediction markets.
Kalshi, a CFTC-designated contract market, has raised $265 million to date, including a $185 million Series C led by Paradigm at a $2 billion valuation with Sequoia, Multicoin, and Bond Capital.
Polymarket CEO Shayne Coplan revealed two rounds: $150 million led by Founders Fund ($1.2B valuation) and $55 million led by Blockchain Capital ($350M).
Investors include Ribbit, Valor, Point72 Ventures, Coinbase Ventures, and angels like Naval Ravikant and Rick Rubin. Their participation bridges crypto and traditional capital.
Background
After limited CFTC relief, Polymarket resumed US operations through its QCX exchange. It now offers binary contracts that turn sentiment into tradable odds.
Behind the Scenes
ICE’s interest follows Polymarket’s expansion. It partnered with Stocktwits on earnings markets, and X (formerly Twitter) named it an official provider. xAI also teamed up with Kalshi, expanding reach beyond crypto natives.
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Regulators Clash Over Event Contracts
Massachusetts regulators sued Kalshi, claiming its NFL contracts amount to unlicensed sports betting. Kalshi asserts CFTC jurisdiction. The case may define where “prediction” ends and “wager” begins.
Background
Kalshi filed NFL stat contracts and self-certified seasonal markets under Rule 40.2. The rule allows listings before formal approval but keeps them under review.
Deeper Analysis
Robinhood withdrew Super Bowl contracts after a CFTC request. The move showed how quickly informal clearances can vanish. ESMA’s European MiCA table omits prediction markets, leaving countries to decide if they fall under gambling law.
Behind the Scenes
Singapore and Thailand blocked Polymarket under gambling rules. The US, meanwhile, leans toward limited inclusion without uniform standards.
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Investors Eye New Risk Frontiers
Analytics platform KaitoAI shows prediction-market “mindshare” rising from under 1% early this year to nearly 3% by October. That’s a 275% annual surge. The trend shows how capital is testing new ways to price political and macro risk despite regulatory uncertainty.
Dune dashboards show Kalshi holding around 60% and Polymarket about 35%. DefiLlama’s 0xngmi noted that token-free models like Polymarket now dominate TVL, once led by Augur. On BNB Chain, OracleBNB and others are expanding multi-chain prediction tools.
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Outlook
The IMF’s July 2025 outlook projects 3.0% global growth. That backdrop favors risk assets and event markets. With more explicit rules, prediction venues could become standard hedging tools for institutions and retail traders alike.
Risks & Challenges
Event-contract rules remain unsettled. Fragmented oversight keeps consumer protection uneven and limits institutional participation.
“Prediction markets teach the public to think in probabilities,” said Interactive Brokers founder Thomas Peterffy. “They turn opinion into measurable confidence.”
“Recent activity underscores my concerns about prediction markets,” stated CFTC Commissioner Kristin Johnson. She warned that speculative incentives can blur intent.
“The greatest thing crypto has done is rebranding ‘betting’ as ‘prediction markets,’ right up there with calling salt and rocks ‘electrolytes,’” wrote mert, CEO of Helius and ex-Coinbase engineer. He offered a wry take on how the industry markets risk as innovation.
Prediction markets are expanding fast, backed by institutional money and policy scrutiny. Whether ICE’s move signals confidence or caution, 2026 may decide if these venues mature into financial infrastructure — or stay a speculative fringe.
