KEYTAKEAWAYS
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Polymarket dominates the global prediction market with massive liquidity and over 90% accuracy, while Kalshi leads the regulated U.S. market.
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Different platforms reflect different survival strategies: Polymarket in the gray zone, Kalshi through compliance, PredictIt under academic exemption, and Augur/Zeitgeist via decentralization.
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Prediction markets have become real-time indicators for elections, sports, and Web3 events, increasingly influencing media narratives and public trust.
CONTENT
REGULATORY STRUGGLES: THE BATTLE IN THE GRAY ZONE
On the night of the 2024 U.S. presidential election, prediction markets unexpectedly stole the spotlight. Billions of dollars flowed into Polymarket, and the odds reflected the result faster than live TV coverage. Yet, while the platform became a global reference point, its founder in New York faced a very different scene: federal agents knocking on his door. The CFTC and the Department of Justice suspected that Polymarket was serving U.S. users without proper registration. In 2022, Polymarket had already been fined $1.4 million and forced to close certain markets. Although it later claimed to block U.S. IPs, many traders bypassed restrictions with VPNs. The investigation reminded everyone that prediction markets still operate in a regulatory gray zone.
Kalshi, in contrast, chose legitimacy from day one. It applied to the CFTC as a regulated event contract exchange, aiming to prove that prediction markets are financial tools, not gambling. The CFTC initially rejected its political contracts, citing “election integrity.” A legal battle followed, and in 2025 federal courts sided with Kalshi, overturning the ban on political markets. It was a milestone for the industry. Yet state regulators pushed back. New Jersey attempted to block Kalshi’s sports contracts as illegal gambling, while over 30 other states filed briefs opposing nationwide expansion. Even with federal approval, Kalshi found itself hemmed in by state-level resistance.
PredictIt’s story is another long legal saga. Originally launched as a research project with a no-action letter, it was ordered shut down in 2022 when the CFTC revoked its exemption. After years of litigation, a settlement in 2025 allowed PredictIt to survive with higher personal limits and no cap on market participants. It continues to exist but has been overshadowed by faster, larger platforms.
The most extreme case is Augur. As a fully decentralized protocol, it has no corporate operator to regulate. Anyone can create markets, which led to creativity but also chaos. Within two weeks of launch in 2018, Augur hosted “assassination markets,” sparking outrage. Regulators could do nothing; the community tried to clean up itself, but user confidence collapsed. Augur became a warning: full decentralization may be ungovernable.
Regulatory struggles define the destinies of these platforms. Polymarket grows in the shadows, Kalshi takes the legal road, PredictIt relies on academic exemptions, and Augur embodies radical decentralization. Four paths, four outcomes, all shaped by the same tension: innovation colliding with the law.
TECHNOLOGY AND USER EXPERIENCE: CODE ON-CHAIN, BETS OFF-CHAIN
Technology and user experience often determine whether prediction markets can reach beyond crypto natives. Polymarket’s success is rooted in its product design: hiding blockchain complexity behind a smooth Web2-like interface. It runs on Polygon, offering near-zero fees and second-level confirmations. Users can deposit USDC with credit cards and trade in real time. The interface feels like a centralized exchange. Vitalik Buterin once praised it as an app that “brings outsiders in,” a result of balancing on-chain transparency with off-chain usability.
Augur represents the opposite. Its early version ran fully on Ethereum mainnet: each bet required long waits and high gas fees. New users often got stuck installing wallets and understanding REP mechanics. Later, the team launched Augur Turbo on Polygon with AMM features, but by then most users had left. Zeitgeist built its own parachain in the Polkadot ecosystem, using ZTG tokens for trading and governance. Performance improved, but wallet setup and cross-chain steps remained a barrier for outsiders.
Market creation and resolution also highlight different philosophies. Augur allows anyone to create markets, leading to both innovation and messy disputes. Polymarket centralizes this step: only its internal team can list markets, based on community suggestions, ensuring clear wording and avoiding legal risks. PredictIt and Kalshi rely on centralized resolution, using official data sources. Polymarket introduced UMA’s optimistic oracle: results finalize quickly unless challenged, in which case UMA token holders arbitrate. This mix ensures speed while maintaining a degree of decentralization.
These choices shaped user scale. Polymarket offered a Web2-like experience and grew into the largest platform. Augur and Zeitgeist stayed experimental. Kalshi and PredictIt remained accessible but limited in scope. In Web3, decentralization is not the end goal—serving people is. Polymarket proved that smooth design can transform niche experiments into mass platforms.
SCALE AND ACCURACY: THE WISDOM BEHIND NUMBERS
The core value of prediction markets lies in whether prices truly reflect real-world probabilities. For that, liquidity and participation are essential. During the 2024 U.S. election, Polymarket reached new heights: $3.7 billion traded that year, with $350 million in a single day. Its total locked value neared $1 billion, representing 85% of the global market. PredictIt, constrained by betting caps, stayed in the millions. Augur and Zeitgeist barely registered. Kalshi grew fast under regulatory protection but still trailed Polymarket’s scale.
Accuracy became the next test. Studies found Polymarket’s overall prediction accuracy around 90%, rising to 94% in the final hours before events. Sports markets proved especially sharp: transparent outcomes kept prices closely aligned with reality. In the 2023 NBA Finals, Polymarket’s odds for the Denver Nuggets mirrored the game’s swings and closed exactly at the true result.
Institutions took notice. Bloomberg integrated Polymarket’s odds into its terminal during the election, and campaign teams reportedly tracked the markets for real-time sentiment. Prediction markets, once dismissed as novelty gambling, became data sources for decision-making.
Biases remain. Long-term markets often inflate accuracy because obvious “No” outcomes dominate. Communities also skew toward overestimating “Yes.” Still, achieving over 90% accuracy is rare in forecasting. That is why prediction markets, at scale, now stand as serious complements to polls and expert analysis.
TRIALS IN MAJOR EVENTS: ELECTIONS, SPORTS, AND WEB3 DRAMA
Prediction markets shine brightest during moments of collective attention. The 2024 U.S. presidential election was one such trial. While media and pollsters hesitated, Polymarket odds surged ahead, calling the result hours before networks confirmed it. Traders digested every twist in real time, and the final odds nearly matched the official outcome. For many, it was the night when prediction markets moved from the fringe to the mainstream.
Sports are another battlefield. Polymarket attracted hundreds of millions in bets on the Euro Cup and NBA Finals, where odds fluctuated live with every goal and basket. Kalshi, with regulatory approval, entered NCAA and NBA contracts, competing with legal sportsbooks. PredictIt avoided sports, and Augur’s attempts failed due to low liquidity. Sports betting’s scale also drew regulators: U.S. states fought to protect their tax base, clashing with Kalshi in court.
In Web3 itself, prediction markets became part of the ecosystem. Ethereum’s Merge, Bitcoin ETF approvals, exchange bankruptcies, and lawsuits against crypto founders—all turned into active markets on Polymarket. Odds often reflected reality faster than media reports. For example, Polymarket consistently priced Bitcoin ETF approval below 30% before the deadline, a forecast later proven correct. Some DAOs even tested prediction markets to gauge support for governance proposals, replacing empty talk with monetary stakes.
From elections to sports arenas to crypto scandals, prediction markets captured collective intelligence in numbers. Polymarket and Kalshi grew in parallel—one in global gray zones, the other in U.S. legal frameworks. PredictIt survived on academic exemptions, while Augur and Zeitgeist stayed on the edges of decentralization. Together they form a portrait of a society that, when facing uncertainty, cannot resist turning it into a wager. The story of prediction markets is far from over—it is only just beginning.
