Author: Conflux
Today, on the trading screens of global macro hedge funds and on-chain crypto whales, two markets might be displayed side by side: one is the S&P 500 index futures, and the other is the real-time odds for "Who will be the next Fed Chair" on Polymarket/Kalshi. The dimensional wall of the financial world is being completely shattered by prediction markets.
Prediction markets, a field long operating on the fringes of finance and gambling, are being pulled onto the capital table. On one side, there is a frenzy of Wall Street and crypto capital pouring in, driving its daily trading volume to break through the $700 million level; on the other side, regulatory agencies in various countries have launched intensive crackdowns and blockades within a month.
A silent war over "information pricing power" is fiercely unfolding against the backdrop of an era叠加 with geopolitical and macro uncertainties.
From Niche Gambling to "Institutional-Grade Pricing Tool"
From 2025 to early 2026, the market size of prediction markets showed exponential expansion. Data shows that on January 12, 2026 alone, the global daily trading volume of major prediction market platforms reached approximately $701.7 million.
Among them, the US-compliant platform Kalshi contributed about two-thirds of the share, while the decentralized platform Polymarket占据了 the main part of the remainder. This marks the transformation of prediction markets from a marginalized narrative to an institutional-grade赛道 with significant liquidity.
The driving force behind this is clear and direct: the higher the macro uncertainty, the more valuable the demand for pricing and risk management of "event outcomes" becomes. Traditional financial derivatives struggle to cover "non-standard events" such as US election results, the timing of specific policy introductions, or the outbreak of local military conflicts, and prediction markets恰好 fill this gap.
Among these, the shift in institutional view is particularly crucial—Polymarket has reached a data cooperation agreement with Dow Jones & Company, and its market data is directly integrated into top financial information terminals like The Wall Street Journal,这意味着 prediction markets are becoming a formal decision-making reference for Wall Street traders and analysts. For crypto capital, prediction market contracts have become a new narrative engine for hedging macro risks and direct speculation.
Regulatory High Voltage: Global "Crackdown" Actions
Synchronized with the market heat is the vigilance and high pressure from global regulators. Over the past month, blockade actions against prediction markets (especially Polymarket) have集中爆发 in many places, forming a clear regulatory阻击带:
- Europe becomes the blockade center: Regulatory agencies in Hungary, Portugal, Ukraine, and other countries have recently taken action相继, ordering the blocking of the Polymarket website or requiring its orderly exit on the grounds of "unlicensed gambling/illegal betting." Countries like France, Switzerland, and Poland had also taken similar measures earlier.
- Precise拆分 of US regulation: Even in the relatively open US, the platform Kalshi has faced challenges. Just yesterday, a Massachusetts court issued a preliminary injunction, prohibiting Kalshi from offering sports betting-like prediction contracts in the state, highlighting that even under the federal framework, state-level regulation of specific categories can impose additional restrictions.
- Insider trading triggers political sensitivity: Earlier this month, an extreme case occurred on Polymarket. A user used only $32 to bet on "Venezuelan President Maduro being ousted by the US" and profited about $400,000 hours after the event occurred. This near-precise prophecy raised huge concerns about intelligence leaks and insider trading, also touching the highest alert level of governments regarding political prediction activities.
As of now, Polymarket has disclosed on its official website: The platform has implemented geographical blocking for 33 countries/regions, mainly concentrated in jurisdictions with strict online gambling regulations.
The Core of the Game: Financial Instrument or New Form of Gambling?
The intense game between the market and regulators is rooted in a fundamental legal定性分歧. From the perspective of institutions and platforms等 supporters, prediction markets are efficient tools for information aggregation and risk pricing, belonging to the innovative category of financial derivatives, and should be regulated by financial regulatory agencies (such as the US CFTC) in the form of "contracts."
However, for most regulatory agencies, especially in Europe and parts of Asia: prediction markets, particularly contracts involving sports, politics, and entertainment events, due to their low threshold, retailization, high entertainment value, and other characteristics, are本质上 closer to gambling. They may trigger addiction, money laundering, market manipulation, and social ethical issues (such as betting on disasters or political assassinations), and therefore should fall into the gambling regulatory framework, subject to strict restrictions or even bans.
This misalignment in定性 has led to the current fragmented global regulatory landscape. The same product might be a financial innovation experiment under negotiation with the CFTC in the US, while in Hungary, it is directly defined as an illegal gambling site and technically blocked.
Outlook
In the future, prediction markets will likely evolve into a binary coexisting格局.
Platforms represented by Kalshi will adhere to the financial regulatory path, strictly limiting the types of tradable events (e.g., focusing on economic data, some non-sensitive policies), serving institutions and qualified investors. Their liquidity quality is high, but品类 are limited, becoming a relatively closed "information pricing特区."
Decentralized platforms represented by Polymarket will continue to operate in regions where regulations are not explicitly blocked or where technology makes complete blocking difficult. They offer a wider range of more down-to-earth event contracts (including elections, geopolitical conflicts, etc.), attracting opportunists seeking high volatility and rich narratives. This will become a "gray zone" where regulatory risks and speculative returns coexist.
The signal for participants is very clear: although the value of prediction markets is being quickly recognized by institutions and will be deeply embedded in future macro trading and risk management models, the legal and compliance risks of directly participating in trading are急剧升高, and these risks are highly differentiated depending on the jurisdiction.
Perhaps in the end, the prediction markets that can truly last long-term and be widely cited by institutions will likely be the "regulation-friendly + category-restricted" version, not the ones that grew野蛮.
This is not only the fate of prediction markets but perhaps also the coming-of-age ceremony that all disruptive financial innovations must undergo when they touch the core of power and ethics.
*This content is for reference only and does not constitute investment advice. The market carries risks, and investment requires caution.
