Kalshi and Polymarket set consecutive daily volume records over the Oct. 3-4 weekend, combining for $8.56 billion, according to Dune Analytics data. More than 80% of Kalshi's September volume involved sports, the activity that state regulators most want to stop.
The prediction-market industry is setting volume records faster than regulators can decide what its products are.
Kalshi and Polymarket set consecutive daily volume records over the Oct. 3-4 weekend, together handling $8.56 billion, according to data compiled by Dune Analytics. Combined volume for the week ended Oct. 4 reached a record $22.2 billion. The pace has not slowed: Kalshi alone set a new single-day record on Oct. 11, according to industry trackers, and whether last week's combined total beat the record depends on which data set is used.
Sports dominate
Most of that activity is sports. More than 80% of Kalshi's trading in September involved sports contracts. In the week ended Oct. 4, parlays and other combination contracts, which bundle several outcomes into one bet, made up 65% of Kalshi's trading and 53% of Polymarket's U.S. activity.
The National Football League has put a number on its share. In a Supreme Court amicus brief filed last week, it said NFL contracts accounted for $1.8 billion of $3.3 billion of volume on the Sunday of Week 1, more than half.
The regulatory front
That concentration is the core of the industry's legal problem. At least 44 states assert that sports event contracts violate state gambling laws. Contracts that bundle several game outcomes look, to state regulators, very much like the parlays offered by licensed sportsbooks.
The federal regulator is taking a different approach. The Commodity Futures Trading Commission has proposed expanding the legal definition of swaps to include prediction-market trading, a step that would place the contracts more firmly under federal derivatives law. A separate interim rule, which excludes casino-style gambling products from the swap definition, takes effect when published in the Federal Register, with comments due within 30 days. The Federal Register is closed on Monday for the holiday, so publication can come no earlier than Tuesday.
What swap status would mean
Classifying event contracts as swaps cuts two ways for the industry. It strengthens the argument that federal law, not state gambling rules, governs the products, which is the defense Kalshi and others have used against state enforcement. It could also bring obligations that come with the swap label, the details of which will depend on the final rule. And the interim rule draws a line: casino-style products sit outside the swap definition, so they would not get that federal cover. Where sports parlays fall relative to that line is the question the industry most needs answered.
Two readings
One reading is that the industry is winning. Volume is at records, the federal regulator is building a framework that supports preemption of state law, and sports demand shows the products have found a mass market.
The other is that success is sharpening the conflict. The more volume comes from parlay-style sports contracts, the harder it is to distinguish the business from sports betting, and state attorneys general, tribes and the courts are not bound by a federal rule proposal.
What to watch
Publication of the CFTC proposal and interim rule, the first comments on where sports parlays fall, and Kalshi's response in its Supreme Court case on Nov. 9 are the next steps.