A new $10 trillion racetrack? Bernstein is optimistic about predicting the long-term potential of the market Robinhood (HOOD.US) and Coinbase (COIN.US) to accelerate layout

The Zhitong Finance App learned that Wall Street investment bank Bernstein said that the rapidly rising prediction market may be far more than just another form of traditional sports betting, but is expected to develop into a new financial market infrastructure. As trading categories expand from sporting events and political events to cryptocurrencies, stocks, commodities, and even business indicators, Bernstein predicts that the global forecast market transaction scale will grow from about 410 billion US dollars in 2026 to about 10 trillion US dollars in 2035, with a compound annual growth rate of about 70% from 2025 to 2035.

Bernstein pointed out that the controversy surrounding the prediction market currently mainly focuses on regulatory definitions, such as whether sporting event contracts should be considered sports betting products regulated by various states or derivatives regulated by the US Commodity Futures Trading Commission (CFTC). However, the bank believes that the market may have underestimated the structural opportunities behind predicting the market.

Unlike traditional gaming companies, the prediction market uses an exchange model. The platform itself does not need to be a counterparty to users' transactions, but instead connects buyers and sellers through a global order book and introduces professional market makers to provide liquidity. This model could further expand the forecasting market from the sports sector to the broader financial market, and attract institutional investors to participate.

Transaction volume will explode to reach 10 trillion US dollars in 2035

It is predicted that the market has seen significant growth since this year. The report shows that the global prediction market transaction scale rapidly increased from about 50 billion US dollars in 2025 to about 300 billion US dollars in the first 8 months of 2026. The main factors driving growth include the rapid development of cryptocurrency and commodity short-term contracts, such as the 15-minute Bitcoin contract, and the boom in sports trading brought about by the World Cup.

Notably, after the World Cup, the predicted market trading volume remained at an all-time high, indicating that new users were not completely lost as the tournament ended. Bernstein predicts that the full year of 2026 transactions will reach about 410 billion US dollars, and further grow to close to 10 trillion US dollars in 2035.

In the process, the structure of the forecast market may also change significantly. In 2025, sports contracts account for about 61% of the predicted market trading volume, and financial assets only account for about 12%. However, Bernstein predicts that by 2035, the share of sports will drop to about 38%, while the share of financial assets, including cryptocurrencies, stocks, and commodities, will rise to about 49%, making it the largest transaction category in the forecast market.

In other words, Bernstein doesn't think that predicting the end of the market is a larger “online betting company,” but rather a comprehensive trading platform that can simultaneously trade different results such as sports, financial assets, economic data, and political events.

From “gambling contests” to trading stocks, gold, and business data

The most basic product to predict the market is a binary contract designed around the outcome of future events. For example, users can trade “whether a team wins”, “whether an index falls above a specific point”, or “whether an economic data exceeds expectations.” If an incident occurs, the final settlement of the contract is $1; otherwise, it is settled at $0. The contract can continue to trade between $0.01 and $0.99 before expiration, so the price itself can also be understood as the market's real-time judgment on the probability of an event occurring.

However, Bernstein believes that future applications will far exceed this type of simple event contract. The bank anticipates that short-term binary options and long-term perpetual futures may gradually appear on the same platform and account system. Users can either trade Bitcoin price results for 5 or 15 minutes, or hold perpetual contracts for assets such as gold and stocks.

What is more noteworthy is the so-called “KPI Market.” In the future, investors may not need to directly trade a company's shares, but instead trade for a specific business indicator, such as car delivery volume, production volume, subscriber growth, or transaction volume.

This means that if investors only want to express their views on a company's operating data, they can directly trade this indicator without having to bet indirectly through the company's stock price, thereby reducing interference caused by macroeconomics, capital allocation, and other factors.

Predicting that the market is attracting new users outside of the gaming industry

Sports is still the most important user portal in the prediction market at present, but Bernstein believes that this market is not simply snatching existing users from traditional sports betting platforms such as DraftKings (DKNG.US), but rather expanding the number of participants in the entire market.

According to the data, about 80% of Kalshi users have never used an online sports betting app before, while DraftKings Predictions matches only about 1% of users of DraftKings's traditional online sports betting business. The report also pointed out that currently there are 20 states in the US, and about 150 million consumers are unable to use the open and licensed online sports betting market, which is equivalent to about 45% of the total US population.

Bernstein estimates that if the prediction market only attracts consumers who may have participated in sports betting in these states, the potential addressable transaction size of the relevant sports prediction market in 2026 could exceed 600 billion US dollars.

Therefore, the bank believes that the more important meaning of predicting the market is probably not to redistribute the existing betting market share, but to expand the user base and liquidity of sports trading itself.

Institutional funding may become the next growth engine

Another potential change in predicting the market is the entry of institutional investors. Bernstein anticipates that in the future, institutional funding will focus mainly on prediction markets other than sports, including cryptocurrencies, stocks, commodities, economic data, and political events. By 2035, institutional transactions may account for about 50% of the non-sports prediction market trading volume, corresponding to about 3 trillion US dollars, accounting for about 31% of the total forecast market volume.

The logic behind this is that predicting the market allows institutions to directly manage risk on a specific event. For example, bond investors can directly trade whether the Federal Reserve will cut interest rates without indirect hedging through US Treasury futures; pharmaceutical funds can establish positions on whether a drug pricing law has passed; and merger and acquisition arbitrage funds can directly trade whether an acquisition can pass antitrust scrutiny.

The advantage of this type of contract is that investors can directly trade the event they wish to hedge against, thereby reducing the risk of base differences when using related assets such as stocks, interest rates, or foreign exchange for indirect hedging.

At present, the trend of institutionalization has begun to emerge. According to the report, in April of this year, Kalshi completed the first major institutional transaction in the forecasting market industry; in June, Polymarket completed the first large-scale on-chain institutional transaction to hedge Nvidia (NVDA.US) H100 GPU computing power rental costs; and Galaxy Digital also completed a Kalshi transaction of about 10 million US dollars linked to the results of the US “CLARITY ACT”.

Robinhood (HOOD.US), Coinbase (COIN.US) and others compete for new financial infrastructure entry

As the size of the forecasting market expands, a competition for control of the industrial chain has begun. Bernstein divides the forecasting market industry chain into multiple links such as consumer entry, futures commission dealers (FCM), exchanges (DCM), clearing agencies (DCOs), and market makers, and believes that with each additional link controlled by itself, the platform can add a new source of revenue.

However, judging from competitive barriers, the bank believes that the most critical thing is still user distribution capacity, because trading and clearing infrastructure can be purchased or built, but retail customers with a large number of deposits need to accumulate over a long period of time.

Among the companies covered by Bernstein, Robinhood is considered to have a clear advantage in terms of industrial layout. It not only has consumer applications and a huge retail customer base, but also lays out exchanges and clearing processes through businesses such as Rothera. At the same time, the company continues to provide users with contracts from other platforms such as Kalshi, Forecasttex, and Crypto.com, thereby expanding product coverage.

Coinbase, Yingtou Securities (IBKR.US), and traditional exchanges and gaming operators are also entering the prediction market in various ways, and a competition is taking shape around the next generation of event trading infrastructure.

Regulation remains the biggest uncertainty

However, there is still significant uncertainty about the forecasting market, and the regulatory status of sporting event contracts in particular. At the heart of the dispute is whether sporting event contracts are financial derivatives regulated by the CFTC or are essentially sports betting that should be regulated by the US states.

Bernstein pointed out that courts have recently given different interpretations of this issue, and legal disputes between US state regulators, the gaming industry, the CFTC, and prediction market platforms are still ongoing. The bank anticipates that the long-term regulatory framework for the sports prediction market may not become more clear until 2027 to 2028.

Therefore, issues that the industry needs to pay attention to in the coming months include whether related cases will eventually reach the US Supreme Court, whether states will further strengthen enforcement and taxation, and whether the US federal level will readjust the regulatory framework.

Despite regulatory risks, Bernstein believes that the forecasting market is undergoing a more important structural change: it is gradually evolving from retail products around elections and sporting events to a trading infrastructure that can accommodate financial assets, macroeconomics, business indicators, and event risks.

If this trend continues, sports betting may only be the first stop in predicting the market's appeal to consumers, rather than the final form. As the share of financial assets and institutional capital continues to increase, it is predicted that the market may eventually evolve into a new type of market spanning traditional finance, crypto assets, and event transactions, and form an annual transaction scale of close to 10 trillion US dollars over the next ten years.