Sector Explodes to $63.5 Billion Amid Institutional Entry
The prediction market industry has officially entered a new era of capitalization and volatility. According to a new report released Tuesday, the total volume for prediction markets quadrupled in 2025, reaching a staggering $63.5 billion. However, this growth comes with warnings of "structural strain" and fragile security designs, as reported by Decrypt based on data from blockchain security firm CertiK.
This massive liquidity influx is attracting heavyweights from traditional finance. In a significant move for institutional adoption, global trading firm Jump Trading is reportedly set to earn equity stakes in both Polymarket and Kalshi in exchange for market-making services. As detailed by Bloomberg and Decrypt, this "liquidity for equity" deal signals that Wall Street is now deeply embedding itself into the infrastructure of event wagering.
For traders utilizing advanced prediction market tools, Jump's involvement suggests deeper order books and tighter spreads are on the horizon, potentially stabilizing the volatility highlighted in the CertiK report.
Regulatory Whiplash: CFTC Retreats, States Attack
While the money pours in, the regulatory landscape has become increasingly contradictory. At the federal level, enforcement appears to be softening dramatically. A shocking report indicates that the CFTC's flagship Chicago office has eliminated its entire team of enforcement attorneys. Decrypt notes that monetary relief secured by the agency has plunged by over 99.9% in the last year, suggesting a potential pivot toward a more crypto-friendly stance under new leadership.
However, as federal pressure eases, state-level battles are heating up. Polymarket has filed a lawsuit against the state of Massachusetts, arguing that state authorities lack the jurisdiction to regulate or ban prediction markets that fall under federal purview. This legal offensive comes as Massachusetts and Nevada prepare temporary bans on the sector, as reported by Cointelegraph.
New Frontiers: Attention Markets
Amidst the legal and financial drama, product innovation continues. Yesterday, Kaito and Polymarket unveiled "Attention Markets," a new derivative product designed to trade on social sentiment and engagement metrics, according to The Defiant. This move further diversifies the asset class beyond political and sports outcomes, tapping into the attention economy directly.