Jeffrey Sprecher sat down for dinner with 27-year-old Polymarket founder Shayne Coplan...
Sprecher – the CEO of financial-services giant Intercontinental Exchange (ICE) –listened to a pitch for a marketplace where people trade the odds of real-world events.
And according to Bloomberg, by the time he left, he was ready to commit up to $2 billion to the platform.
Coplan's pitch was about "prediction markets." They started as a way for folks to place bets with one another using cryptocurrency as payment.
And as recently as a few years ago, they were considered Internet curiosities that most regulators ignored.
But now, they're winning backing from some of the biggest names in finance.
The two dominant prediction markets, Kalshi and Polymarket, are in an all-out battle for league partnerships. The National Hockey League is the first major U.S. sports league to sign on with both platforms.
Event contracts are even showing up on UFC broadcasts as live-prediction scoreboards.
And behind the scenes, another battle altogether is going on.
State gaming agencies, tribal authorities, and federal judges are trying to decide whether prediction markets are legal gambling... or a new branch of finance.
Prediction markets are structured like exchanges, not casinos...
Users trade contracts with one another. A typical contract pays $1 if a specific outcome happens... and nothing if it doesn't.
Let's say someone was betting on the result of the 2024 presidential election. The contract says there's a 70% chance of Kamala Harris winning and a 30% chance of Donald Trump winning.
Someone could pay $0.70 to bet on a Harris victory. Someone else could pay $0.30 to bet on Trump. And given the outcome, the person who bet on Trump would win the whole dollar (minus a small platform fee).
The platform simply matches buyers and sellers. So it looks more like a futures exchange than a casino book... where bettors engage with the "house."
Thanks to that structure, prediction markets argue that they fall under commodities rules instead of gaming rules. In the U.S., both Kalshi and Polymarket are overseen by the Commodity Futures Trading Commission.
This architecture brings two big advantages to prediction-market makers...
First, the venue collects a relatively simple trading fee... instead of taking the other side of every bet.
Traditional sportsbooks like DraftKings (DKNG) and FanDuel-owner Flutter Entertainment (FLUT) built their businesses around a very different setup.
They hold a state gambling license, post a line, and stand on the opposite side of every wager. These operators act as the "house." And while it can be a profitable setup, it's bound up in state-by-state regulation and taxation.
Prediction markets also offer far more variety. Users can trade on election outcomes, inflation prints, sports events, corporate news, and even pop-culture happenings. Prediction markets feel closer to a live odds widget than a betting menu.
Folks are flocking to this relatively new form of trading...
In 2024, all major U.S. sportsbooks handled about $2.8 billion per week. As of October 2025, the two major prediction platforms alone handled more than $2 billion in weekly volume.
Capital is pouring in, too. Kalshi's valuation has jumped from about $2 billion to more than $10 billion in a matter of months. Polymarket is now seeking money at a valuation of more than $12 billion.
The major sportsbooks also spend a lot acquiring and keeping customers... from advertising costs to "incentives" like free bets for signing up.
Right now, prediction markets aren't spending any money on incentives. And they've nearly caught up with traditional sports betting, volume-wise.
Prediction markets are moving from a curiosity... to a core component of the modern wagering landscape...
They offer lower costs and more flexibility than traditional betting platforms. And they're backed by financial juggernauts.
Rules can change. So we can't take regulatory risk off the table. But for incumbent sports betting companies, it doesn't change the takeaway...
As more competition rises in the gambling space, it's going to weigh on the old model.
Sportsbook stocks deserve an extra layer of scrutiny these days. Both DraftKings' and Flutter's stocks are down this year, even though the S&P 500 is up 16%.
A lower-cost, higher-growth competitor has entered the arena. And it's already reshaping how money flows through the gambling ecosystem.
Regards,
Joel Litman
December 15, 2025
