Kalshi Hits 2 Significant Milestones as World Cup Kicks Off
Prediction market giant Kalshi reached two substantial milestones in the last week.
On Friday, June 12, the company exceeded $100 billion in lifetime trading volume. Then, over the weekend, Kalshi customers executed more than $1 billion in trades on both Saturday and Sunday, marking the first time that figure was reached in a single day.
While the news is obviously good for Kalshi, the company is still in legal hot water in several states with the prediction markets vs. sportsbooks issue. Recently, the Nevada Gambling Control Board referred Kalshi to a district court in an escalating war with prediction markets.
Big events fuel Kalshi milestones
It's no surprise that major sporting events have fueled Kalshi's first billion-dollar days. The World Cup kicked off last week in the United States, Canada, and Mexico, and over the first four days of the world's biggest sporting event, daily trade volume exceeded $750 million.
The New York Knicks ended their 53-year drought on Saturday, beating the San Antonio Spurs to win the NBA title, and for that single game, Kalshi recorded trade volume exceeding $200 million.
The World Cup will continue to spur a large number of event contract sales, and while the NBA and NHL seasons are over, the MLB season is in full swing.
Ninety percent of the trade volume at Kalshi and other prediction market companies involves sports.
The volume vs. the handle
It is important to understand the distinction between sports betting volume in a prediction market and sports betting handle at a typical online sportsbook. They are not the same thing.
The volume for prediction markets goes to matched trades, with both opening and closing positions. Meanwhile, sports betting handle refers to the total amount wagered on a specific sporting event, such as a baseball game or a World Cup match.
Growth is there, but sportsbooks still rule
Even with the rapid growth of prediction markets like Kalshi, they are still behind typical online sportsbooks. Prediction markets fall behind sportsbooks in pricing, hold, and the depth of the overall sports betting product, including betting markets.
Still, prediction markets mirror products offered by typical sportsbooks, and growth is evident. For example, in Kalshi's first month, parlay trades accounted for only 1% of total volume. Now, with more parlay offerings, that number is currently at 20%.
Trading volume milestones will pique interest
Kalshi's latest milestones will only increase interest in the prediction-market battle among operators, lawmakers, and gaming regulatory bodies. Those entities have already voiced their concerns that prediction market contracts are just like regular sports bets.
Since prediction markets are regulated at the federal level by the Commodity Futures Trading Commission (CFTC), states with legal sports betting are not seeing any revenue from trades.
That's the main issue, as several stakeholders take legal action against prediction market companies and the CFTC to get their piece of the pie.
