Prediction markets, where people trade $1 contracts on future events, logged a record $188 billion between July and September. The buyers behind those trades paid a fraction of that.

The record, tracked by CryptoRank, is nearly 70% above the previous quarter. One company, Kalshi, accounts for most of it, but US courts are split on whether its biggest product is gambling.

Is the Market as Big as It Looks?

The total counts every contract at its full payout, not its price. Pew Research Center explains the method.

“Each contract is counted at its $1 notional value, or the value of the contract if it is correct, rather than the price at the time of the trade,” Pew Research Center explained.

So a contract bought for 20 cents adds $1 to the total.

On Kalshi, buyers paid about $41 billion for $142 billion in contracts last quarter, DeFi Rate data shows. That works out to roughly 29 cents per dollar.

On Polymarket, most individual buyers lose. Galaxy Research counted only accounts run by people, not bots.

“69.2% of the 2.9 million ‘retail’ accounts… finished below break-even,” Galaxy indicated.

Together, those accounts were down $338.9 million since 2020.

Why Courts are Fighting Over Kalshi’s Sports Contracts

Kalshi is a US exchange overseen by the Commodity Futures Trading Commission (CFTC). As recently as March, it split volume evenly with rival Polymarket.

Then Kalshi pulled ahead. Its weekly lead became permanent from mid-April, DefiLlama data shows.

Sports drove it. Trading on sports topped $58 billion on Kalshi in June and July alone, Pew found. Across platforms, sports made up 68% of buyer spending over the past month, per DeFi Rate.

“Prediction markets volume reached a record $188B in Q3 2026, up nearly 70% QoQ and 21x higher than in Q3 2025. Kalshi was the main driver of the growth, with sports accounting for around 40% of its Q3 trading volume,” CryptoRank noted.

Ohio and Tennessee say that is gambling. On September 25, a federal appeals court agreed. Another appeals court had sided with Kalshi in New Jersey.

The Ohio and Tennessee ruling lets those states limit where Kalshi sells sports contracts. They drive most of the sector’s spending.

Meanwhile, Polymarket faces its own fight, including New York’s Polymarket lawsuit over alleged illegal gambling.

Source: BeInCrypto