Bernstein now expects prediction markets to process $10 trillion in annual trading volume by 2035, a sharp upward revision from the roughly $410 billion per year currently anticipated. The forecast lands as prediction market platforms compete for dominance in the fast-growing sector, with Kalshi and Polymarket at the forefront.

Prediction markets let traders take positions on real-world outcomes through event contracts whose prices track perceived probabilities. The projection carries weight for these firms because their growth strategies rest on the assumption that financial contracts — not sports — will become the industry's dominant driver, making the mix of trading activity, not just its size, the measure of whether those strategies hold up.

Financial assets set to unseat sports

Bernstein expects overall volume to grow at roughly 70% per annum from 2025 through 2035. The more consequential shift concerns composition. Contracts tied to crypto, equities, and commodities made approximately 12% of total volume in 2025, a share Bernstein projects will climb to 49% by 2035 — overtaking sports, which remains the largest single category today.

Sports contracts move in the opposite direction, declining from 61% of volume in 2025 to 38% in 2035. Part of the growth reflects product development. According to Bernstein, "KPI markets, where users can trade single metrics for a company, such as production, deliveries or subscriptions, rather than its share price," alongside perpetual futures, are expanding from the crypto segment into the commodity and individual stock segments.

Kalshi pulls ahead as crypto contracts spread

Industry volume has climbed from around $50 billion in 2025 to approximately $300 billion in 2026 through August, propelled by short-term crypto and commodities contracts, including 15-minute Bitcoin contracts. Sports volume rose during the FIFA World Cup and has held near record highs since the tournament ended.

Kalshi has so far emerged as the clear leader, accounting for nearly 60% of industry volume by August — well above its 35% share in 2025. Crypto's contribution to trading activity on the platform has surged from under 5% in January to nearly 20% by August. Commodities trading has also expanded, from below $2 million in 2025 to around $590 million year-to-date, of which $410 million was traded in August alone.

At Polymarket, sports contracts account for roughly 52% of total volume this year, up from 39% last year, while political markets have fallen to 22% from 32%. The split with Kalshi's crypto-led mix shows the sector's two leading venues are growing on different compositions — a divergence that matters for any sector-wide composition forecast.

Bernstein's $10T prediction hinges on a $900T financial market

The headline figure rests on a vast addressable market. Bernstein sizes the market for financial asset contracts at about $700 trillion in 2025, growing to $900 trillion by 2035. If prediction markets capture just 0.5% of that by 2035, the arithmetic yields roughly $4.7 trillion in annual volume from financial contracts alone.

A regulatory caveat tempers the outlook. Bernstein expects regulation of prediction markets for US sports to be approved no earlier than 2027-2028, citing conflicting court decisions over whether such contracts qualify as derivatives under federal regulations or gaming under state law. That unresolved classification — federal derivatives rules versus state-by-state gaming law — is the open variable Bernstein itself flags in the forecast.

The $10 trillion call marks a dramatic increase from Bernstein's position five months ago. In April, the firm had forecast volumes reaching $1 trillion by 2030, up from $51 billion in 2025 (CNBC). From here, the markers to track are the ones Bernstein's own numbers hinge on: whether financial contracts' share continues climbing toward the projected 49%, and how the derivatives-versus-gaming question is ultimately resolved.

Source: Cryptopolitan