Betting On Everything – Polymarket and Prediction Markets Compete with Casinos in 2026

The frontpage of Polymarket reads like a stock ticker of questions based on potential headlines.

“Will the US invade Venezuela” by January 31st or March 31st?

Khamenei out as Supreme Leader of Iran by June 30th, Yes or No?

Will the 21-14 Suns beat the 21-11 Rockets?

One of these is not like the other, but it sounds a lot like traditional sportsbetting. In fact I could take the spread on Houston as the favorites at -8.5 and parlay the under of total game points at 223.5. Well hold on, what if I parlay the Houston spread and bet that China invades Taiwan by the end of 2026? Fulham is going up against Chelsea, but I bet it will be a draw. I think Timothee Chalamet takes Best Actor for the 2026 Oscars, so I’ll put that on my parlay, too.

Prediction markets are making massive headlines as the 24/7 news cycle fuels these platforms: The capture of Venezuela's leader Nicolas Maduro on Saturday January 3rd led to an anonymous user making over $409,000 US dollars, according to Polymarkets data.

There’s major questions whether these prediction markets are just trading platforms or thinly veiled disguises for betting with legal loopholes.

Polymarket, one of the leading prediction markets, is a crypto forward platform and could be poised to upend traditional online casinos and wagering with its peers.

How are Prediction Markets Legal?

Polymarket and Kalshi are at the forefront of the prediction betting markets, letting users bet on virtually anything. Legally, prediction betting markets are exchange traded markets, letting users buy event contracts tied to specific outcomes, usually binary “yes” or “no” on whether the event occurs. Users are essentially trading against other users orders, not the “house”. The market price of a given contract is determined by collective user sentiment. If 66% of users believe that the S&P 500 will be up by the end of tomorrow, January 6th, the contract’s “up” option price will be higher than the “down” option price.

How Is User Sentiment Determined? 

It’s a combination of a few things: 

• aggregate beliefs shown by trading behavior

• where volume on contracts is moved. 

• hype, to put it simply. 

Prediction markets are increasingly gaining status as credible sources for predicting outcomes of future events, even correctly calling the outcome of the 2024 US Presidential election when the polls could not. In November, Goldman Sachs announced plans to collaborate with Kalshi to integrate the prediction market into the firm’s research, and CNN entered a partnership in December to share data.

What Makes Kalshi Legal?

Kalshi is considered a federally regulated US exchange by the Commodity Futures Trading Commission (CFCT) as a “Designated Contract Market” (DCM). Initially offering only event contracts, it has expanded into sporting events, but not without legal pushback, especially in states where sportsbetting is not explicitly legal. Since Kalshi is federally regulated and is legally considered contract trading, not outright betting, it has been faced with complex legal battles.

Notably, Despite Nevada’ Gaming Control board sending a cease and desist to Kalshi in March 2025, citing Nevada’s right to regulate gaming activity within its borders”, Kalshi was able to still offer contracts until November, when a federal judge determined that Nevada had the right to regulate the prediction platform, at least in the markets closely resembling sportsbetting. Nevada is just one of almost two dozen states Kalshi finds itself in lawsuits regarding its offerings, especially when it comes to wagering on sports.

What makes Polymarket legal? 

In its early days, Polymarket ran mostly unregulated until CTFC settled with Polymarket to pay a $1.4 million penalty back in January 2022, arguing that event market contracts consisting of binary options fall under the CTFC’s jurisdiction and require oversight and regulation. They exited the US only to return summer of last year after acquiring QCEX, joining Klashi as a DCM under the CFCT’s oversight, but still deeply integrating crypto into its platform, albeit with KYC/AML procedures and other regulatory facets.

Polymarket offers a wide range of different markets to trade on, but in the US it faces the same regulatory backlash and complexity as Kalshi when it comes to sportsbetting. Not to mention, unlike traditional betting platforms, prediction markets typically require that users only be 18 or older, instead of 21, in the US. country to country the age still varies, but regulators are only pressing harder with KYC verification stemming from fears of underage gambling.

How Polymarket Uses Crypto

Polymarket differs from Kalshi in some key ways. While Kalshi only offers betting with fiat currency, Polymarket is deeply embedded into crypto to conduct its operations, exclusively using USDC on its own Polygon network (based off of Ethereum). Polymarket uses what it calls its “Central Limit Order Book”, a hybrid approach still using blockchain technology, allowing 24/7 trading with no global barriers. Off the chain it uses an operator to manage users orders and submit matched trades.

On the chain is where settlement happens using signed order messages. Smart contracts allow the exchange to use custom binary outcome tokens (CTF ERC1155 assets and ERC20 PToken assets, according to Polymarket’s documentation), allowing a payout on the blockchain if  the conditions of the order’s smart contract are met. The UMA protocol records the contract and on-chain resolution, while using community votes for betting resolutions and disputes, leaving this element peer to peer.

What Effects Will Prediction Markets Have?

Prediction Markets Winning Popularity

Their immense gain in popularity is hard to ignore: In November last year, TKO, the parent company of UFC, announced a multiyear deal with Polymarket. Kalshi announced its interest in expanding its offerings to the Brazilian market back in December, with Kalshi’s third round of fundraising giving the prediction platform an 11 billion dollar evaluation.

Traditional sportsbooks are trying to get in on the action, as sportsbook DraftKings debuted a new app, DraftKings Predictions, on December 19th, regulated by the US Commodity Futures Trading Commission, much like Kalshi. FanDuel announced a partnership with CME Group, a derivatives marketplace offering futures and options trading, on December 23rd. It seems that outright sports betting has slowed down in its expansion, states like Texas and California haven’t changed their mind about legalizing sports betting, so the books have to find another way into market penetration.

Crypto exchanges aren’t ignoring the prediction markets' potential either - last year Coinbase and Kraken announced plans to make their mark.

Where Polymarket Fits In

Despite Polymarkets' return to the market, Kalshi still holds roughly 60% of total prediction trading volume, but a lot of that comes from its partnership with Robinhood. Not to mention, this return to market is not complete, full use platform remains on an invite only basis in the US, although it remains open to international participants, excluding 33 countries per Polymarket’s site.

What’s Polymarket’s best bet?

They’ve already missed the majority of the 2025-6 NFL season. With Super Bowl LX and the Winter Olympics in Milano looming on the horizon, they could be looking to heavily target crypto users worldwide who want 24/7 crossborder access to placing predictions, something that prediction markets relying on fiat might be harder pressed to offer. USDC is already one of the most popular cryptocurrencies used for online gambling, so the market is there. Their partnership with PrizePicks inked this past November is only going to help expand to markets where regulators have been resilient to traditional sportsbetting.

Are Online Casinos Affected? 

Many online crypto casinos are using blockchain to power its platform for both sportsbetting and traditional games, not too dissimilar from how Polymarket is using blockchain right now.

The difference? With online casinos and sportsbooks, you’re betting against the house. Any bets against the house are always going to be against the player’s favor. Playing perfect blackjack still puts the house at a 0.5 advantage, and slots with above 97% RTP (Return to Player) require long term playing and a massive bankroll to gleam any real return.

Prediction markets let you bet peer to peer, with or against user sentiment. Prediction platforms are middlemanning the trades and just taking a small fee with each order. This user sentiment can shift and change the odds, whereas casino odds remain static, letting users trade at prices they want.

Is there a chance platforms like Polymarket and Kalshi offer casino style games somewhere down the line? Could you be using USDC for both predicting and gambling on Polymarket?

Potentially, although how these games are incorporated and regulated are complex questions. There’s already so many legal and regulatory concerns in the prediction markets’ court.

On the other end, are online casinos going to start incorporating similar prediction platforms? Their popularity is hard to deny. Operators would be wise to start finding ways to put trades next to slot machines and other offerings at the risk of losing players who have found other ways to bet.

There’s no hard numbers available for the collective lost potential revenue between online casinos and sportsbooks due to the arrival of prediction markets, but the moves made by these entities and legal battles are clear indicators that their bank accounts are hurting. The iGaming world could be in for a massive change should prediction markets continue to add to their offerings.

Past Controversies and Predicting Risks

Betting on world events and geopolitics has naturally raised ethical concerns across the board, whether it came from the Ukraine War, the arrest of Nicolas Maduro, or the results of the 2024 US Presidential Election. Despite the blur of headlines we read everyday, there are people at the heart of them. We don’t have a clear way to measure how people could be incentives to promote and propagate harm on others.

These markets have the potential to be affected by insider information, especially if that information is based on military actions, passing legislation, and changes in public policy. It’s pretty easy to equate this to insider trading, which many have claimed was how the anonymous user made money on the capture of Maduro.

US Representative Ritchie Torres is poised to introduce the Public Integrity in Financial Prediction Markets Act of 2026, which would make it illegal for government officials to partake in these markets.

The CTFC has restricted certain events being traded under the notion that they are “contrary to the public interest”, and what falls under that is changing and shifting on a daily basis. This raises the potential that public misinformation could be disseminated on a wide scale in order to tip the market in a particular direction, or even direct manipulation of politics.

Sportsbooks are pushing back, but state regulators are pushing back just as hard, whether independently or in collaboration with each other. Nevada is just one example, but the platform's argument of being federally regulated has caused states to counter that it is tantamount to unregulated betting within their jurisdiction. Regulators are also arguing that consumer protection, especially for minors, is extremely lacking with none of the traditional tools offered by online casinos, like self exclusion timers.

There are multiple parties involved here–Prediction markets, sportsbooks, online casinos, federal courts, and state regulators–making the future of this new type of betting quite uncertain. But Polymarket’s cryptocurrency and blockchain usage could very well lay the groundwork for online casinos to follow, changing the iGaming market.

Despite the legal hurdles and concerns, you can’t ignore the massive backing and hype surrounding these platforms. There’s a chance your online casino could be showing headlines in between hands of blackjack.