'Sports is the entry point, not the endgame': Bernstein projects prediction market sector to reach $1 trillion in annual volume by 2030

As prediction markets evolve into broader information markets across sports, economics, politics, and culture, analysts at research and brokerage firm Bernstein have projected the sector to reach $1 trillion in annual volume by 2030, citing regulatory clarity, mainstream distribution partnerships, and a structural liquidity edge over traditional gaming markets.

Prediction markets generated around $51 billion in volume during 2025, the analysts led by Gautam Chhugani highlighted in a Tuesday note to clients, tripling year over year as liquidity rotated from the 2024 U.S. election cycle toward sports, crypto, macro, and political contracts.

"Increasing regulatory clarity at the federal level (vs. state-regulated traditional frameworks) is expanding the addressable market, while blockchain-based tokenization and integration with crypto markets is enabling global liquidity, long-tail event creation and participation from institutions," the analysts said.

Despite state-level scrutiny in recent months, particularly surrounding sports event contracts, the CFTC has asserted that it holds "exclusive jurisdiction" over prediction markets and is seeking to write rules as the industry expands. 

Kalshi and Polymarket have already executed a combined $60 billion in volume so far this year, with the analysts expecting $240 billion in 2026 and an 80% compound annual growth rate through the end of 2030.

Sports contracts currently dominate prediction market volumes at a 62% share, benefiting from the structural limitations of online sports betting platforms and fragmented state-level regulation, the analysts said.

However, the analysts expect sports' share of total volumes to moderate to around 31% by the end of 2030, as crypto, macro, political, and economic contracts emerge as the larger long-term opportunity. "Sports is the entry point, not the endgame," they said.

"We expect an institutional market to develop around economics, business and political contracts, as investors seek more direct and discrete exposure to events," they added. "We also expect hedging demand from corporates, insurance firms exposed to specific event risks."

The analysts also projected prediction markets to expand from $400 million in annual recurring revenue in 2025 to around $2.5 billion in 2026, driven by increasing volumes and higher monetization.

Polymarket recently moved away from its zero-fee model and is now operating at an ARR of $420 million, Bernstein noted, with expectations for industry revenue to scale to approximately $10.8 billion by the end of 2030.

'Asymmetric upside' for Robinhood led by prediction markets

Robinhood (HOOD) and Coinbase (COIN) have both emerged as key distribution layers for prediction markets, the analysts noted, particularly Robinhood, with its Kalshi-powered prediction markets hub reaching around $350 million ARR within 12 months of launch.

Bernstein's projected prediction market growth, alongside "high confidence" in a broader crypto recovery, can drive "asymmetric upside" for Robinhood stock, the analysts wrote in a separate note on Tuesday.

The analysts said a weak first-quarter print is already priced in HOOD's approximate 50% drawdown since the fourth quarter of 2025, and they expect the market to be forward-looking as trading volumes recover in the second quarter and beyond.

"We expect prediction market revenue to increase from ~$150Mn in 2025 to ~$586Mn in 2026E (286% YoY), accounting for ~17% of transaction-based revenues and ~10% of total revenue in 2026E," the analysts said. "We expect 2026 to be catalyst-rich for prediction market volumes as the U.S. hosts the Football World Cup in the summer and political activity heats up in H2 on U.S midterm elections."

Bernstein rates Robinhood and Coinbase as outperform, with $130 and $330 price targets, implying around 81% and 89% in respective upside potential from Monday's closing prices.

Gautam Chhugani maintains long positions in various cryptocurrencies. Certain affiliates of Bernstein act as market makers or liquidity providers in the equities securities of Coinbase and Robinhood.