Prediction markets recorded $188 billion in trading volume during the third quarter of 2026, according to CryptoRank, as the sector’s rapid expansion puts its regulatory treatment under increasing scrutiny.
The reported total rose by nearly 70% from the previous quarter and reached 21 times its Q3 2025 level. Kalshi was the main growth driver, with sports representing around 40% of its quarterly trading volume.
CFTC Chairman Mike Selig has argued that prediction markets should meet the standards expected across American financial markets.
His position reflects a broader federal effort to clarify which contracts exchanges can offer, strengthen safeguards and defend the agency’s authority against competing state regulation.
Kalshi Drives Growth Beyond Election Trading
The latest figures suggest prediction markets have expanded well beyond the election contracts that helped bring them mainstream attention.
CryptoRank attributed much of the quarterly increase to Kalshi, highlighting sports as a substantial component of the exchange’s activity. The 40% figure refers specifically to Kalshi’s volume, rather than the entire prediction-market sector.
Political and economic events remain prominent. CryptoRank’s dashboard tracks contracts covering congressional control, presidential nominations and Federal Reserve decisions alongside sports outcomes.
Its data showed approximately $1.4 billion in combined open interest across Kalshi and Polymarket.
Open interest measures outstanding positions, while trading volume captures turnover over a period. Neither should be treated as platform revenue or the amount customers have collectively earned.
The distinction also matters when interpreting the $188 billion headline. Prediction-market statistics can use different accounting methods, making apparently similar totals difficult to compare.
Pew Research Center’s recent analysis, for example, used notional taker volume, counting each contract at its $1 potential payout rather than its purchase price. A contract bought for 20 cents therefore contributes $1 under that methodology.
That illustrates why large volume figures do not necessarily represent equivalent cash spending.
Washington Wants Financial-Market Standards
Selig’s statement draws a clear distinction between exchange supervision and casino regulation.
“You cannot regulate an exchange like a casino and expect the same protections as a federally regulated market,” he said in the supplied post, arguing that prediction markets should face the standards applied elsewhere in American finance.
The CFTC has already taken concrete steps toward clarifying the framework. A proposal published in June would amend its event-contract rules, specify factors for deciding whether contracts are contrary to the public interest and clarify the meaning of gaming.
The proposal gives a comparatively favorable preliminary assessment of certain sports contracts, including those based on aggregate game outcomes and objectively verifiable results. It emphasizes surveillance, trading restrictions and coordination with sports governing bodies.
That assessment does not automatically approve every sports-related product. The proposed framework retains an evaluation of individual contracts and their risks.
The jurisdictional battle is also ongoing. In May, the CFTC filed a Sixth Circuit brief asserting exclusive authority over prediction markets and arguing that federal derivatives regulation preempts state laws applied to CFTC-regulated exchanges.
Manipulation Risks Shape the Next Phase
Rapid expansion brings scrutiny to products whose outcomes participants can directly influence.
On Sept. 22, CFTC staff issued guidance covering contracts tied to whether a named person says particular words, attends an event or interacts with someone.
The advisory distinguishes those products from outcomes generated through broader processes, such as elections or economic data releases.
A person whose behavior determines settlement, or someone close to them, may be positioned to influence the result or exploit advance knowledge.
The guidance does not create new legal obligations. It explains the staff’s view of existing requirements.
For platforms, sustaining growth increasingly means demonstrating that contracts can be resolved fairly and trading can withstand scrutiny. Washington’s decisions will help determine which products can support the sector’s next expansion.
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