US Growth Forecasts Under Scrutiny as Cryptocurrency Heavyweights are Watched Closely
The U.S. prediction market sector is at a potential inflection point, with notable developments from Polymarket, Kalshi, and Novig. These platforms, which allow users to bet on the outcomes of various events, are progressing towards legal legitimacy, despite ongoing legal and political challenges.
Polymarket, a blockchain-based platform that outsources disputed markets to holders of a digital token called UMA, recently acquired a derivatives exchange (QCX) with a Commodity Futures Trading Commission (CFTC) license in a $112 million deal. This move allows Polymarket to offer legal access in the U.S., as its model now requires and has CFTC authorization.
Kalshi, another CFTC-regulated platform, is legal for American users but is facing legal disputes, particularly over its sports betting contracts. In August 2025, it suffered a setback when a federal judge denied its injunction against Maryland’s sports betting regulators, highlighting regulatory friction at the state level.
Novig, a U.S.-based peer-to-peer sports prediction market, has pursued a compliant path from the outset. It recently raised $18 million in Series A funding to expand into more states and categories. Novig avoids some controversies by not operating in all states and using a peer-to-peer rather than house-betting model, though regulatory scrutiny remains.
The Trump administration's shift towards a more permissive regulatory stance is enabling platforms like Polymarket, Kalshi, and Novig to push for expansion across states and new market categories such as sports and politics. However, competition is increasing as established FinTech and gaming companies like DraftKings, Robinhood, and Coinbase signal interest in entering the prediction market category.
Industry leaders, including the American Gaming Association, call for state-level regulation to govern prediction markets due to their gambling-like characteristics, indicating potential future regulatory frameworks aimed at oversight and consumer protection. Massive venture capital inflows, such as Kalshi’s $185 million raise valuing it at $2 billion and Polymarket’s nearing $200 million raise (valuing it around $1 billion), highlight strong investor confidence and growth potential in this sector.
Payment mechanics on prediction market platforms are more than a technical choice; they influence user growth, cost structure, and regulatory posture. In the U.S., any system that touches retail money flows must meet anti-money laundering (AML) and know your customer (KYC) standards. Hybrid platforms like Novig aim to blend blockchain efficiency with fiat-based user-facing products, using ACH or debit card on-ramps.
Decentralized prediction markets, such as those powered by blockchain, may face a challenge from the influence of "whales," large token holders who can potentially manipulate prices and outcomes. Crypto-native platforms like Polymarket settle trades in stablecoins such as USDC, which allows near-instant settlement and global reach but also exposes users to crypto-specific risks.
Regulation can set boundaries, but the integrity of prediction markets ultimately rests on liquidity, transparency, and community trust. Proving manipulations in pseudonymous blockchain markets is difficult, and enforcement is tricky due to the lack of a legal entity to hold accountable in decentralized protocols.
In summary, U.S. prediction markets are transitioning from legal gray zones towards regulated, CFTC-authorized markets, driven by significant funding and regulatory progress but still navigating complex legal battles and state-level oversight challenges. The outlook is one of cautious growth, with expanding market opportunities tempered by ongoing legal and regulatory uncertainty.
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