Bank of America Projects $1.1tn Volume For Sports Event Contracts Market

Analysis from Bank of America indicates that the US market for sports-related event contracts could reach around $1.1tn in annual trading volume. This reflects sustained growth in prediction markets and increasing overlap with traditional sports betting. The difference in regulatory frameworks for both platforms also contributes to the rapid expansion. 

Sportsbooks rely on state-issued licences, which require approval in each jurisdiction. But prediction markets can operate through the Commodity Futures Trading Commission or tap into international liquidity pools. This model removes the need for state-by-state expansion, allowing platforms to scale nationally. 

Based on an average transaction fee of 1%, the projected market size would translate into roughly $10bn in annual revenue. This places prediction markets within the range of revenue expectations for leading sportsbook operators like DraftKings. 

Kalshi dominates domestic activity in the US

Within the US, Kalshi dominates the industry, accounting for approximately 90% of prediction market transactions. Based on reports, 79% of the platform’s activity in March was driven by sport-related contracts. 

Conversely, its closest domestic competitor, Crypto.com, controls an estimated 4% share. Offshore platforms such as Polymarket were excluded from the analysis due to the focus on regulated US activity.

Growth trajectory outpaces early sportsbook expansion

The current expansion rate has been compared to the early development of legal sports betting in the US. Its “genesis year” followed the repeal of PASPA in 2019. This is similar to the turning point for prediction markets in 2025 after Kalshi’s court verdict. 

Prediction markets reached approximately $63.5bn in trading volume in their full first year. This overshadows the $13.34bn figure recorded by regulated sportsbooks in 2019. National accessibility and integration with financial trading systems have contributed majorly to this disparity, enabling higher-frequency participation. 

Analysts also note that part of the volume is generated by automated liquidity providers rather than individual traders.

Revenue model depends on scale over margin

Prediction markets operate on a peer-to-peer structure, where participants trade against each other rather than against a house. Revenue is generated through transaction fees instead of a betting margin.

With average fees near 1%, platforms require significantly higher trading volumes to match the revenue output of sportsbooks, which typically operate with margins around 7.5%

Based on recent statistics, prediction markets are expected to grow at a faster pace than sports betting within the US. Despite differences in regulation and revenue models, the industry’s revenue projections rival that of top sportsbook operators.