2025 Prediction Market Growth: Shift to Sports Betting and Fintech Expansion

This analysis is based on the MarketWatch report [1] detailing prediction market dynamics in 2025. After accurately forecasting the 2024 U.S. presidential election, prediction markets saw exponential growth, reaching $10 billion in November 2025 trading volume [1]. The market has since shifted its primary focus to sports betting, which Citizens’ financial-technology research director Devin Ryan identified as “a gateway” to broader market offerings [1].

Major fintech platforms are accelerating their entry into the space:

• Coinbase (COIN)
  announced a partnership with Kalshi on December 17, 2025, to launch prediction markets alongside crypto and equities [2]. It further deepened its commitment on December 22 by acquiring The Clearing Company, a prediction markets innovator [3].
• Competitors including FanDuel, Robinhood, and Truth Social have also announced plans to offer prediction markets covering both sports and non-sports contracts [1].

On December 19, 2025, U.S. equity markets showed positive momentum:

• S&P 500: +0.62% to 6,834.49 [0]
• NASDAQ Composite: +0.80% to 23,307.62 [0]
• Dow Jones Industrial Average: +0.33% to 48,134.90 [0]

Coinbase’s stock experienced volatility around its prediction market announcements:

• December 18: -5.49% to $239.20 [0]
• December 19: +0.22% to $245.12 [0]

1. Fintech Diversification
   : Coinbase’s entry into prediction markets represents a strategic move to diversify beyond its core crypto offerings, leveraging its established user base to drive adoption of new products [2][3].
2. Mainstream Onramp
   : The shift to sports betting positions prediction markets for broader appeal, as sports betting has existing regulatory frameworks in many regions, potentially easing expansion into other real-world event categories [1].
3. Regulatory Scrutiny
   : The growth of prediction markets by major platforms heightens regulatory attention, with industry leaders expressing caution about potential compliance challenges. This regulatory environment could shape the market’s future trajectory [4].

• Regulatory Uncertainty
  : Prediction markets face unclear regulatory landscapes in some regions, which could restrict operations or increase compliance costs for platforms [4].
• Intensifying Competition
  : With multiple fintech and sports betting platforms entering the space, competition for market share is likely to grow, potentially impacting profit margins.

• Exponential Growth Potential
  : November 2025’s $10 billion volume indicates strong demand, with room for further expansion as platforms add new offerings [1].
• Mainstream Adoption
  : Partnerships with established fintechs like Coinbase could accelerate the adoption of prediction markets by retail investors [2][3].
• Broader Market Expansion
  : Sports betting’s role as a gateway could lead to expanded offerings in political, economic, and other real-world event categories [1].

Prediction markets experienced exponential growth in 2025, shifting from political events (where they correctly predicted the 2024 U.S. presidential election) to sports betting, with November 2025 trading volume reaching $10 billion. Major fintech platforms including Coinbase, FanDuel, Robinhood, and Truth Social are expanding or planning to offer prediction markets. Coinbase announced a partnership with Kalshi and the acquisition of The Clearing Company to enhance its offerings. U.S. equity markets showed gains on December 19, 2025, while Coinbase’s stock experienced volatility around its prediction market announcements. Regulatory uncertainty remains a critical factor for the emerging asset class.