Prediction Frontier Q3 2026 Sector Report

Prediction markets had their largest quarter on record. From July 1 to Sept. 30, traders on Kalshi, Polymarket, Polymarket US, and Novig exchanged $179.6B in contracts, 84.3% more than in the second quarter, and paid $56.1B for them. The gap between those two figures matters. More than a third of all contracts were combos and parlays, multi-leg bets bought for a few cents each, so headline volume runs well ahead of the money traders put at risk.

Kalshi took 71% of dollars paid, Polymarket's international and US venues 27%, and Novig, which opened on Aug. 4, 1%. September set the monthly record at $75.5B in contracts as the NFL and college football seasons began, and Sept. 27 set the daily record at $4.19B.

The World Cup filled June and July, and we set four tests of whether it grew the industry for good. One passed. August volume stayed above its pre-tournament trend, but the wallets that arrived in June stopped trading sooner than earlier ones, open interest fell 35.5% in the four weeks after the final, and Polymarket, which leaned harder on the tournament, grew less than Kalshi from May to August.

Sports carried the quarter. The four exchanges traded $34.9B on match and game winners, led by tennis at $9.17B and baseball at $7.48B, and US Open tennis grew 12.2 times on last year. In September, combos, sports and crypto made up 94% of all contracts, while politics traded $901M a month before the US midterms.

Investors kept paying up. Polymarket raised about $1B at a $21B valuation, Kalshi was in talks at $40B, and IG Group agreed to buy Underdog for up to $1.3B.

The courts went the other way. The Ninth and Sixth Circuits ruled 3 to 0 against Kalshi within a month, courts in nine states ruled against an exchange, and several European regulators blocked Polymarket. The CFTC sent two event-contract rules to the White House on Sept. 28, which leaves the fourth quarter to show who regulates these markets. Both large exchanges also faced insider trading and wash trading questions. Kalshi issued its first lifetime ban.

The quarter in numbers

Volume slid as the World Cup wound down and sat near $10B a week from late July to mid-August. It then doubled. The week of Sept. 21 reached $19.9B, and September as a whole reached $75.5B, the largest month the industry has recorded.

Counted in dollars paid, the quarter looks different. On Kalshi, the average amount paid per $1 of contracts fell from 32¢ in July to 24¢ in September. This drop can be attributed to the rise of combos, which typically trade at low prices. Kalshi’s September record volume of $60.7B in contracts translated to $14.7B in dollars paid, 10% more than in July. Polymarket traders paid about 50¢ per contract in every month.

Kalshi's share of dollars paid rose from 69% in July to 73% in August and September, while Polymarket's international venue lost 46.3% of its monthly contracts over the same months and Polymarket US and Novig took up the difference.

Open interest is the dollar value of contracts still open at the end of a day. These are positions traders have bought and not yet sold or seen settle. Volume counts every trade, so the same dollar can be counted many times in a day. Open interest is a snapshot. It shows how much money sits in the market at one moment, and because a market can trade heavily with little open interest when traders move in and out quickly, open interest that keeps rising over weeks is the better sign that capital is staying.

Across Kalshi, Polymarket and Polymarket US, open interest rose from $1.73B on June 10, the day before the World Cup, to $2.10B on the day of the final. It fell to $1.36B by Aug. 16 and ended the quarter at $2.54B on Sept. 30, of which $2.18B was on Kalshi, as NFL and college football markets filled. DeFi Rate publishes open interest for those three exchanges. Novig does not report it.

Download the full report to read Q3 Prediction markets sector report.