Posted on: April 9, 2026, 05:01h.
Last updated on: April 9, 2026, 05:01h.
Bank of America estimates sports event contracts on prediction markets could eventually hit $1.1 trillion in annual volume That would result in revenue of $10 billion, assuming 1% commissions Report sent sports betting stocks tumblingSports event contracts featured on prediction markets such as Kalshi and Polymarket could eventually generate $1.1 trillion in annual volume, according to a new report from Bank of America.
Sports event contract volume could eventually reach $1.1 trillion, according to Bank of America. (Image: Getty)That would mark an eleven-fold increase from the estimated $100 billion in event contract turnover prediction markets are expected to see this year. Bank of America projects that if sports derivatives volumes swells to $1.1 trillion, prediction market operators could generate $10 billion in yearly revenue based on 1% commissions.
The report arrives as yes/no exchanges are attempting to diversify beyond sports, but as Bank of America points out, nearly 80% of Kalshi’s volume in March was by way of sports event contracts. The bank acknowledges there’s life outside of sports on Kalshi with derivatives tied to cryptocurrencies representing two-thirds of the exchange’s non-sports volume. There’s also evidence of event contracts on culture and politics as well as mention markets gaining traction among traders.
Kalshi Asserting Itself
The US sports betting industry is a duopoly comprised of DraftKings (NASDAQ: DKNG) and Flutter Entertainment’s (NYSE: FLUT) FanDuel. In terms of market share in the prediction markets space, Kalshi is setting itself. Bank of America estimates the exchange controls 90% of event contract activity in the US with its nearest competitor being Crypto.com at just 4%.
Kalshi is becoming rapidly integrated into daily life with always on odds for markets across finance, crypto, pop culture, and sports,” note Bank of America analysts Julie Hoover and Shaun Kelley.
Some Kalshi’s dominance is attributable to Polymarket not yet being live in this country. As for Kalshi and its competitors can get to $1.1 trillion in annual sports event contract volume, it’s plausible because research confirms sharp sports bettors are leaving traditional sportsbooks for prediction markets where they’re not limited or barred for winning too much. Additionally, platforms such as Kalshi incentivize sports betting “whales” by reducing or eliminating fees in exchange for the liquidity provided by those bettors.
“Sharp bettors are typically banned or limited on regulated sportsbooks for beating the house too frequently,” add the Bank of America analysts. “For these bettors, who often wager/trade much more than a casual customer, a prediction market could be much more attractive since they don’t get limited and can play the sportsbook house and market make against casual bettors.”
Report Casts Pall Over Sports Betting Stocks
In a movie investors have seen before, fears of prediction markets encroaching on territory previously controlled by gaming companies led to a sell-off in the sports betting equity complex. The Bank of America report sent shares of DraftKings and Flutter lower by 7.06% and 3.89%, respectively, today, though volume in both names was below average.
Shares of DraftKings and Flutter are off 38% and 55.5%, respectively, over the past year with some of those declines tied to the rise of prediction markets. While some research suggests prediction markets haven’t significantly chipped away at sportsbooks’ market share, Bank of America confirms the upstart industry has advantages.
Those include federal regulation allowing (for now) yes/no exchanges to offer sports contracts in some states where sports wagering isn’t legal, a younger client base and lack of clarity on taxation, meaning companies like Kalshi aren’t subject to the same state-level tax treatment as are sportsbooks.
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