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Prediction markets just posted their biggest month on record — and the numbers underneath that record tell a very different story.
Kalshi and Polymarket generated more than $50 billion in notional trading volume in June, driven largely by the FIFA World Cup, according to a Macquarie report cited by Legal Sports Report. Kalshi alone accounted for roughly $33 billion of that total, pushing its market share to about 65%, up from 57% in May.
Annualized, June’s pace implies an industry on track to process more than $500 billion a year, with sports contracts making up roughly half of all activity.
But headline volume hides an uneven market. A CNBC analysis of Polymarket’s closed contracts from 2021 through May found that roughly 70% generated less than $10,000 in reported trading volume, fewer than 10% reached between $100,000 and $1 million, and more than 45,000 markets — nearly 5% of the total — recorded no trading at all. Kalshi showed a similar pattern in a separate review of its on-chain data.
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Record volume, concentrated prediction market gains
The biggest markets — elections, championship games, breaking news — keep proving there’s real demand, pulling in millions or billions of dollars and creating fast-moving prices.
Macquarie pointed to infrastructure deals reinforcing that momentum:
- DraftKings launched its own exchange, DKeX, built on the platform it acquired from Railbird Technologies.
- Polymarket partnered with Liga MX using Genius Sports data.
- Kalshi is reportedly exploring a funding round that would value the company at nearly $40 billion, roughly double its last raise.
Away from those marquee contracts, platforms run thousands of smaller markets that may interest only a narrow group of traders — a tradeoff between offering variety and spreading activity too thin.
Why thin markets trade differently
Liquidity shapes how a market behaves: more participants generally means tighter spreads and easier entry and exit. Constantin Bürgi, an economics professor at University College Dublin, said thinly traded markets see wider price swings because a single trade can move prices more than it would in a heavily traded contract.
Dartmouth economics professor Eric Zitzewitz added that thinner markets carry wider gaps between buy and sell prices, making them costlier for casual traders.
Atlanta-based trader Logan Sudeith, a former financial risk analyst, said he favors higher-volume, short-term markets because they’re more capital-efficient — a preference the data backs up. Contracts lasting a week or less, often tied to breaking political news, were among the most likely to top $1 million in volume.
Where human traders are scarce, bots fill the gap
Automated trading is common in low-volume markets.
In a CNBC news report, University of San Diego business professor Joshua Della Vedova, who classified accounts as bots if they made more than 50 trades a day or 1,000 overall, found bots accounted for more than 80% of volume in markets under $10,000.
Bots aren’t unique to prediction markets, but their presence stands out more when few human traders are active. Della Vedova’s research found bots were profitable across market sizes, netting about $1.2 million in shallow markets and roughly $35.1 million in markets above $10 million in volume from November 2022 to February 2026, though he said bots still favor larger markets because they offer more trading opportunities.
Are quiet markets still trustworthy?
Researchers are split on whether low volume undermines prediction markets’ core promise: aggregating many traders’ views into an accurate forecast. Evercore ISI strategists, reviewing five years of closed Kalshi and Polymarket contracts, found higher-volume markets tend to produce more reliable probabilities — and just 8% of markets ever reached $1 million in volume.
Yale finance professor Theis Ingerslev Jensen sees it differently, arguing accuracy hinges more on who’s trading than on how much money is involved. “Thin markets are not automatically inaccurate, but they are less reliable,” he said.
Rutgers statistics professor Harry Crane cautioned against writing off quiet markets entirely, saying “the lack of liquidity, on its own, does not discredit a market’s signal.”
Prediction market regulatory uncertainty looms
That growth is unfolding against a shifting legal backdrop. The CFTC’s pending rule would largely preserve sports-related contracts, which make up more than 85% of Kalshi’s volume, though dozens of tribal and state lawsuits remain unresolved.
According to news by Legal Sports Report, Macquarie warned that a future administration could take a more restrictive stance, leaving the industry’s outlook tied to politics.
As platforms race to add markets, the challenge ahead isn’t just growth — it’s building enough participation across the board to keep prices meaningful.
