Prediction Markets Betting – What iGaming Operators Need to Know

Prediction markets spent decades on the margins of finance and political forecasting. In 2025, they moved to the front page. Driven largely by the 2024 US election cycle — and the remarkable accuracy of platforms like Polymarket and Kalshi — event-based wagering crossed into the mainstream, attracting retail participants, institutional attention, and regulatory scrutiny in roughly equal measure. By the end of 2025, total activity across major platforms had exceeded $44 billion, a figure that would have been unthinkable just five years earlier.

For the iGaming industry, this shift is not an abstract development. Online sportsbooks and casino operators are already asking the right questions: How does event-based betting sit alongside our existing vertical? Who owns the customer? Where does regulation draw the line? This guide, prepared by the M&A and advisory team at CasinosBroker.com, walks through everything an iGaming stakeholder needs to understand about prediction markets — how they work mechanically, how they differ from traditional sportsbooks, and why the smartest operators are moving early.

1. Key Takeaways

2. What Are Prediction Markets?

A prediction market is a structured marketplace where participants commit money to the outcome of a real-world event. Events are typically framed as binary yes/no questions — Will inflation fall below 3% this year? Will this party win the election? — and each outcome is represented by a contract that pays a fixed amount if correct. The going price of any contract at any moment reflects the aggregate probability the market assigns to that outcome.

The concept is intuitive for anyone already working in iGaming. You are essentially trading odds, except those odds are set collectively by the participants rather than by a house or trading desk. The more confident the crowd becomes in a particular outcome, the higher the contract price climbs, and vice versa.

As of 2026, two names dominate the global conversation: Polymarket, a blockchain-native platform launched in 2020, and Kalshi, which went live in 2021 under formal regulatory oversight. Beyond these two, platforms such as PredictIt and Manifold operate on a smaller scale, typically focusing on specific subject areas, while steadily growing their user bases. All of them share the same foundational premise: crowd intelligence, expressed through financial commitment, tends to generate highly calibrated probability estimates.

3. A Brief History: From Papal Wagers to Blockchain Contracts

Prediction markets are far older than the internet. Records from 16th-century Europe document merchants wagering on the outcome of papal elections — an early and notably high-stakes form of event-based betting. By the early 1900s, Wall Street betting pools on US presidential races were commonplace enough that the New York Times published their implied odds alongside conventional coverage.

The modern incarnation emerged in the 1990s and 2000s, initially as academic tools used by universities to test the accuracy of crowd forecasting. The Iowa Electronic Markets, still operating today, were among the first to demonstrate empirically that market-derived probabilities often outperform traditional polling. The internet then opened the door for retail participation, and blockchain technology added a new dimension: the ability to run prediction markets without a central counterparty, using smart contracts to handle settlement automatically.

The 2024 US elections were the true inflection point. When platforms like Polymarket correctly called results ahead of major polls, the mainstream media took notice. So did regulators. And so did every major online sportsbook operator in the United States.

4. How Prediction Markets Work: The Peer-to-Peer Model Explained

In the standard peer-to-peer (P2P) model, participants do not bet against the house. Instead, they buy and sell contracts — often called shares — directly with one another. Each contract has two sides: one that pays out if the event occurs, and one that pays out if it does not. Contracts settle at a fixed value (typically $1.00) upon resolution.

Prices are not set by the platform. They emerge from trading activity. If a market asks “Will Country X enter a recession this year?” and “Yes” contracts are trading at $0.65, that price reflects the crowd’s collective view that there is approximately a 65% chance of a recession occurring. A participant who believes the probability is higher than 65% can buy “Yes” contracts at $0.65. If the recession happens, each contract settles at $1.00 — a profit of $0.35 per share. If the recession does not materialise, the contract expires worthless.

When more participants want to buy “Yes” shares than sell them, buyers must offer a higher price, driving that contract upward. The inverse applies when sentiment turns bearish. Prices therefore adjust in real time as information enters the market — new polling data, economic indicators, breaking news — making prediction markets among the most responsive forecasting tools available.

Platforms can be centralised or decentralised. Centralised platforms such as Kalshi manage user accounts, hold funds, and settle outcomes directly. Decentralised platforms use smart contracts to automate this process without a central intermediary, eliminating counterparty risk but introducing additional technical and regulatory complexity.

5. Who Creates Markets — and How Do Platforms Make Money?

Every prediction market platform maintains an internal team responsible for researching, structuring, and launching new markets. This team defines the question, sets clear resolution criteria, and manages objective settlement. Most platforms also allow users to propose market ideas, though proposals are reviewed before they go live. Three core principles typically govern whether a market is approved: the risk of manipulation must be minimal; the market must not incentivise harmful behaviour; and the resolution must rely on a verifiable, trusted data source.

Revenue models are straightforward. Platforms like Polymarket and Kalshi generate income primarily through transaction fees — a small percentage taken on each trade. Some platforms layer in fees on winnings or on market creation. The simplicity of this model is part of the appeal: unlike a sportsbook, the platform does not carry book risk on individual outcomes. Its income is a function of volume, not accuracy. That dynamic creates strong incentives to attract liquidity, which in turn makes markets more accurate and more attractive to sophisticated participants.

6. Prediction Markets vs. Sports Betting: Key Differences for iGaming Operators

The mechanics above will feel familiar to anyone who has spent time inside a sportsbook operation. Bets, odds, payouts, and positions — the vocabulary is largely shared. But the structural differences matter, particularly for operators thinking about how prediction markets could integrate with or extend their existing platforms.

In a traditional sportsbook, players bet against the house. The operator sets the odds, applies a margin, and manages payout exposure. Odds may be adjusted before acceptance, but once accepted, they are fixed. Cashout features allow early position exits, but the price offered is determined by the operator and typically includes an embedded margin that favours the house. The event scope is overwhelmingly sport-focused.

Prediction markets invert most of these dynamics. Odds emerge from participant trading rather than operator calculation. The platform does not carry book risk on individual markets. Participants can exit freely at market price, without a house-controlled cashout margin. And critically, the event scope is unlimited — politics, macroeconomics, technology, culture, entertainment, and sport all fit within the same framework.

Despite these structural differences, the customer overlap between sportsbook users and prediction market participants is substantial. The same individual who bets on weekend football may also want to trade a contract on the next central bank rate decision. This is precisely the logic that has led FanDuel, DraftKings, and other major US sportsbooks to spin up dedicated prediction market brands. Event contracts are not a replacement for the sportsbook — they are an extension of it.

7. Fixed-Odds Event Betting: The iGaming-Friendly Alternative

Running a true peer-to-peer exchange is operationally demanding. It requires liquidity pools, a matching engine, and a risk framework that most online casino and sportsbook operators simply do not have in place. Recognising this, the B2B software market has developed an alternative that adapts the core proposition of prediction markets to fit existing operational and commercial structures.

Fixed-odds event betting platforms apply the same event scope — politics, economics, entertainment, sport — but use a sportsbook-compatible model. Players bet directly against the operator. Odds are derived from implied probabilities and adjusted continuously based on market signals, exposure, and risk logic. Once accepted, odds are fixed at the moment of the bet, exactly as they would be in a standard sportsbook environment. This removes the need for matching engines and liquidity management while preserving the core appeal: a broad, always-on event calendar that goes well beyond sport.

From an integration standpoint, solutions like the SOFTSWISS Prediction Markets platform can be deployed via API or iFrame within an existing casino or sportsbook environment. The operational lift is minimal. The product differentiation is significant. For operators who want to capture the growing appetite for event-based wagering without rebuilding their technology stack, this is the most viable near-term path.

8. Global Regulatory Landscape

There is no unified global framework governing prediction markets. Depending on the jurisdiction, the same product can be classified as a financial derivative, a gambling activity, or an undefined grey-area instrument. That classification determines everything: whether the platform can legally operate, which licences it must hold, and what consumer protections apply.

In the United States, the dominant regulatory lens is financial rather than gambling. Kalshi operates under the oversight of the Commodity Futures Trading Commission (CFTC) as a designated contract market. However, the regulatory environment is actively evolving. In March 2026, US lawmakers introduced the Prediction Markets Are Gambling Act, a bill that would reclassify event trading as gambling — a development that would fundamentally reshape the competitive landscape if passed.

Europe presents a patchwork of approaches. The EU has no unified framework, and individual member states have applied their own rules. Many — including Belgium, France, Italy, Poland, and Romania — treat unlicensed prediction market platforms as prohibited gambling operations. The notable exception is Gibraltar, which in 2026 became the first European jurisdiction to formally licence a prediction market operator. Predict Street received a betting intermediary licence under Gibraltar’s existing gambling framework and is set to launch with markets tied to the 2026 FIFA World Cup.

Across Asia, Oceania, and most of South America, prediction markets are either explicitly banned or exist in regulatory grey areas. Australia prohibits them as unlicensed gambling activities. Singapore has blocked platform access. Brazil and Argentina have both moved to ban unlicensed platforms. The picture is somewhat more open in parts of Africa and Latin America, though regulatory attention is increasing.

9. Why iGaming Operators Should Pay Attention Now

The strategic case for iGaming operators engaging with prediction markets is not complicated. The customer base already exists on your platform. The engagement mechanics — wagering on outcomes, tracking positions, reading odds — are immediately familiar. And the event calendar that prediction markets open up extends well beyond the sports fixture list, removing the seasonal gaps that suppress sportsbook revenue every summer and during major sporting off-seasons.

Prediction markets are, in the clearest sense, an always-on wagering vertical. There is always a political event on the horizon, always a central bank decision approaching, always a tech IPO or award ceremony or cultural milestone that a segment of your player base wants to trade. This is not a niche audience. The same demographic that fuels online casino GGR growth is increasingly active on Polymarket and Kalshi.

For operators currently evaluating acquisitions, joint ventures, or white-label expansion, prediction markets represent a differentiation opportunity that is not yet saturated. Early movers who establish compliant operations — either by building or acquiring relevant technology — will have structural advantages as the regulatory environment consolidates and consumer familiarity grows.

10. Conclusion

Prediction markets have moved firmly out of the academic and niche-trading world. With over $44 billion in platform activity in 2025 alone, a growing regulatory framework in key jurisdictions, and established iGaming operators already spinning up dedicated brands, this vertical deserves serious strategic attention.

The mechanics are familiar. The customer is already on your platform. The event scope removes the calendar constraints that limit traditional sportsbook revenue. And the B2B infrastructure now exists to integrate event-based betting without rebuilding your technology from scratch.

The regulatory picture is still forming — and that is precisely why operators who move thoughtfully now will be best positioned when the rules solidify. Whether you are evaluating an acquisition, a white-label partnership, or a standalone launch, the window for early-mover advantage is open.

CasinosBroker.com supports iGaming operators and investors at every stage of this process — from deal sourcing and due diligence to platform evaluation and go-to-market advisory. If you want to understand how prediction markets fit into your growth strategy, get in touch with our advisory team.

11. Frequently Asked Questions (FAQ)

Q1. What exactly are prediction markets in the context of iGaming?

Prediction markets are structured platforms where participants place money on the outcomes of real-world events — ranging from elections and economic data releases to sports results and cultural milestones. In the iGaming context, they represent a new wagering vertical that sits alongside traditional sportsbooks and online casino products, offering an always-on event calendar that is not constrained by sporting seasons or fixture schedules.

Q2. How do prediction market odds differ from sportsbook odds?

In a traditional sportsbook, odds are set by the operator who applies a margin and manages payout exposure. In a peer-to-peer prediction market, prices emerge dynamically from participant trading activity and reflect the crowd’s collective probability estimate. Prices adjust in real time as new information enters the market, rather than being controlled by a trading desk.

Q3. Are prediction markets legal for iGaming operators to offer?

Legality varies significantly by jurisdiction. In the United States, prediction markets are currently regulated primarily as financial derivatives under CFTC oversight, though legislative proposals exist to reclassify them as gambling. In Europe, many countries treat them as unlicensed gambling, though Gibraltar granted the first European prediction market licence in 2026. Operators must assess compliance requirements carefully in each target market before launching.

Q4. What is the difference between a P2P prediction market and a fixed-odds event betting platform?

A P2P prediction market facilitates direct trading between participants, with prices set by supply and demand. The platform does not carry book risk. A fixed-odds event betting platform operates like a sportsbook: the operator sets odds derived from implied probabilities, accepts bets against the house, and manages risk accordingly. For most iGaming operators, the fixed-odds model is far easier to integrate and operate.

Q5. Which prediction market platforms are currently dominant?

As of 2026, Polymarket — a blockchain-native platform founded in 2020 — and Kalshi — a CFTC-regulated platform launched in 2021 — are the two dominant global platforms. Smaller platforms including PredictIt and Manifold operate in more niche or topic-specific segments and are growing steadily.

Q6. How do prediction market platforms generate revenue?

Most platforms earn income through transaction fees charged on each trade — typically a small percentage of the contract value. Some platforms also charge fees on winnings or on market creation. Unlike sportsbooks, platforms do not earn a margin on individual outcomes, making their revenue a direct function of trading volume and platform liquidity.

Q7. Can an existing online casino or sportsbook integrate prediction markets?

Yes. B2B solutions such as SOFTSWISS Prediction Markets allow operators to integrate event-based betting into existing platforms via API or iFrame, without building exchange infrastructure from scratch. This significantly lowers the barrier to entry and allows operators to go live within an established tech stack.

Q8. What types of events can prediction markets cover?

The scope is essentially unlimited. Markets can be built around political elections, economic indicators (inflation, GDP, interest rate decisions), sports outcomes, entertainment awards, technology milestones, corporate events, and cultural happenings. This breadth is one of the core commercial advantages over traditional sportsbooks, which are primarily constrained to sporting events.

Q9. Is there an M&A market developing around prediction market assets?

Yes, and it is accelerating. CasinosBroker.com is already tracking buyer interest in iGaming assets with event-betting capabilities, as well as sellers looking to position their sportsbook infrastructure, data-feed technology, or licensed platforms for acquisition. As the sector matures and regulatory clarity improves, M&A activity in this vertical is expected to intensify.

Q10. How does CasinosBroker.com support operators interested in this vertical?

CasinosBroker.com provides iGaming M&A advisory, deal sourcing, due diligence support, and platform evaluation services across the full spectrum of iGaming verticals, including prediction markets and event-based betting. Whether you are looking to acquire an asset with existing capabilities, evaluate a white-label solution, or structure a partnership, our advisory team can support every stage of the process. Contact us directly through the marketplace to discuss your requirements.