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Sports wagers on Kalshi, the prediction market start-up whose popularity has surged since the 2024 US presidential election, are now delivering estimated annualised revenues of about $1.3bn.
That sum is close to a quarter of the total sportsbook revenue for betting giant DraftKings and underlines the rising threat that prediction markets pose to traditional sports betting operators.
FT analysis of Kalshi data found that trade volume and fees skyrocketed last autumn, as the American football season kicked off. As of this month, Kalshi’s annualised revenues from sports trading accounted for about 90 per cent of all fees on the platform.
The FT’s estimates were based on Kalshi’s publicly disclosed fee structures and do not account for reduced fees paid by participants in Kalshi’s market makers programme, as the details of their fee structures and trading volume are not disclosed.
Kalshi declined to comment.
Monthly active users of Kalshi’s app have ballooned from 600,000 at the start of 2025 to 5.1mn in the year to February 9, according to figures from market intelligence provider Sensor Tower.
The rapid growth has raised fears that prediction markets are taking a slice of the $14bn US sports gambling market.
Shares in sportsbook giants DraftKings tumbled on Friday, ending 13.5 per cent lower in New York after the company said it expected 2026 revenues would be between $6.5bn and $6.9bn — short of analysts’ consensus expectations of $7.2bn.
Meanwhile, FanDuel owner Flutter’s stock tumbled more than 11 per cent. Both companies have lost more than half their market value in the past year.
Prediction markets such as Kalshi allow customers to bet on binary outcomes of future events. They have been able to bypass sports gambling bans in certain states by arguing that their regulatory status under the CFTC pre-empts state-level laws.
That case is being challenged by states and Native American tribal groups and may ultimately be decided by the Supreme Court.
Both Kalshi and Polymarket saw a strong rise in trading after they successfully tipped Donald Trump as the favourite in the 2024 US presidential election and have continued to expand ever since.
Slowing sportsbook volumes, meanwhile, have fuelled fears that the rise of these prediction markets is eroding traditional sportsbook profits.
Excluding states that recently legalised sports betting, sportsbook handle — the total sum of money wagered by bettors — fell 2 per cent year-on-year in December, according to figures collated by Bank of America.
That was the first monthly decline in volumes since a 2018 Supreme Court decision opened the door to legalised online sports betting in the US.
Last week’s Super Bowl was widely seen as an indicator of the way the winds are blowing. Most states are yet to report results, but the $133.8mn of bets placed on the match in Nevada sportsbooks was the lowest in a decade, according to figures from the Nevada Gaming Control Board.
Kalshi, meanwhile, said trading volume related to the Super Bowl, which included bets on the halftime show as well as sports wagers, surpassed $1bn.
Leading sportsbook operators have rejected the suggestion that they face a structural threat. DraftKings chief executive Jason Robins said that, in markets with legalised sports betting, those switching to prediction markets were mostly “low-margin or even negative-margin customers”.
For the majority of retail bettors, Robins said sportsbooks offered a more fully fledged product with “better promotions”, while prediction markets were a “great substitute” for those living in states that prohibit sports gambling.
Barclays analyst Brandt Montour speculated that while “sharps” — professional sports bettors who consistently beat the market — were moving into prediction markets, the “bread-and-butter retail sports bettors” who generate most of sportsbooks’ profits were sticking around.
Still, many investors remain unconvinced, even as leading sportsbooks push their own predictions products. In a letter to shareholders, Robins said DraftKings, which launched the standalone DraftKings Predictions in December, could “emerge as the leader in this nascent category”.
FanDuel owner Flutter, which also launched a standalone predictions app in December, has insisted that prediction markets offer an “incremental opportunity” to sell in states that prohibit sports betting.
Speaking ahead of the launch, Flutter chief Peter Jackson argued that customers in regulated states would “continue to prefer the richer experience provided by regulated sportsbooks”.
Citi analyst Monique Pollard noted that data from Similarweb, which tracks internet traffic, showed comparable levels of interest in Kalshi’s website in both regulated and unregulated states.
Figures from Apptopia, which tracks mobile device penetration, show that Kalshi’s app is slightly, but only marginally, more popular in states where sportsbooks are banned.
Kalshi’s founders have pitched their platform as a fairer form of betting because it does not have a “house edge” and instead makes money by charging per transaction — unlike traditional sportsbooks.
While Kalshi offers wagers on everything from politics to weather — chief executive Tarek Mansour has said it is “making the world a little bit smarter about the future” — sports bets account for the bulk of its revenues.
