Prediction markets processed more than $44 billion in wagers last year, but regulators say many of the top-performing participants are now automated trading bots rather than humans.
On Polymarket, automated bots now run more than 30% of active accounts. Data from the platform’s top earners shows that 14 of the top 20 accounts are controlled by bots.
More than 37% of these automated accounts consistently.
Lawmakers target insider trading risks
Polymarket trading activity fell 8.9% in April for the first time since August, as competitors gained market share.
According to Dune Analytics, the platform and its US operation registered $10.2 billion in bets in April, a decrease from $11.2 billion the previous month.
Meanwhile, rival platform Kalshi saw volume jump 13% to reach $14.8 billion in April.
The decrease occurred as Polymarket tried to rebuild its US footprint while under increased scrutiny from politicians concerned about insider trading.
Senator Elizabeth Warren wrote to the Commodity Futures Trading Commission in March, along with more than 40 other members of Congress.
They wanted laws that would ban government officials from profiting from secret material on these platforms.
“The CFTC maintains that event contracts are a type of swap subject to its jurisdiction, and, therefore, it should ensure that federal employees understand existing restrictions on prediction market insider trading,” the lawmakers said.
Several Polymarket users have drawn suspicion for placing winning bets on sensitive world events, including military actions in Venezuela and potential conflict with Iran.
CFTC Chairman Michael Selig told reporters that the agency utilizes AI tools to examine trade patterns, detect anomalous conduct, and collaborates with blockchain tracking businesses like Chainalysis to monitor offshore platforms such as Polymarket.
According to an AIMPACT update dated May 15, the CFTC uses AI to scan vast volumes of trading data, assisting staff in identifying suspect accounts and deciding whether to initiate investigations or issue subpoenas.
The business is combining blockchain analytics tools with market anomaly detection technologies to monitor both cryptocurrency and traditional financial markets.
The CFTC has received many allegations of odd trading and is actively looking into “hundreds to thousands” of potential cases. Future enforcement efforts are likely to broaden.
Selig stated that the agency will take action against U.S. users who attempt to mask their location by utilizing VPNs to access prohibited services.
That enforcement applies to worldwide marketplaces.
Even while platforms like Polymarket operate outside of the United States and lack U.S. licenses, the CFTC said it will seek enforcement against cross-border trades involving Americans and may utilize extraterritorial authority if necessary.
Platforms are reacting to the demand.
Polymarket and Kalshi have improved their checks for insider trading and market manipulation, bringing in external blockchain data providers to meet regulatory requirements.
The CFTC offered prediction market platforms some regulatory relief on Wednesday, issuing a no-action letter that exempts them from certain swap reporting requirements.
The exemption applies to exchanges and clearinghouses that handle event contracts.
Agency staff said they would not pursue enforcement against platforms that skip those reporting rules, following requests from companies seeking clarity on how event contracts should be regulated.
Although event contracts are officially classed as swaps since they have yes-or-no outcomes, the CFTC believes they work more like futures and options due to their uniform terms and exchange trading.
According to the new guidance, firms can report these transactions directly to the Commission in a manner similar to futures and options markets.
The relief now applies to 19 firms, including Polymarket US, Kalshi, Gemini Titan, and Bitnomial. Other companies listing event contracts may request coverage on the same terms.
Top prediction market platforms, including Kalshi and Polymarket, are rushing to offer highly leveraged crypto derivatives at the exact moment state and federal authorities are clashing in court over whether the industry’s core products constitute illegal betting or legitimate financial instruments.
Over the past year, these companies have gained national prominence by facilitating wagers on discrete, real-world occurrences, ranging from political races to macroeconomic data releases.
Now, by preparing to list perpetual futures, which are complex contracts that never expire and allow traders to multiply their market exposure using borrowed funds, these platforms are blurring the line between niche forecasting hubs and full-service digital asset exchanges.
Against this backdrop, this shift drastically expands their potential customer base, but it also amplifies the legal risks associated with the platforms.
Historically, platforms like Kalshi operated on a cyclical, event-driven basis, with traffic and trading volume spiking around major catalysts such as a presidential debate or a championship sporting event and then plummeting once the outcome was settled.
In this kind of market, a user purchased a binary “Yes” or “No” share, and the contract expired upon the event’s resolution.
Perpetual futures fundamentally alter that business model. Because these derivatives lack an expiration date, participants can maintain their market positions indefinitely, provided they meet ongoing margin requirements.
The instruments frequently allow users to leverage their bets up to 50 times their initial capital, attracting aggressive speculators seeking rapid returns from minute price fluctuations.
By rolling out these derivatives, Polymarket and Kalshi are abandoning their siloed event-contract operations to compete directly with centralized exchanges and retail brokerages. The underlying strategy for both platforms is to convert occasional political bettors into daily, high-frequency traders.
While Kalshi has explicitly stated its intention to enter the perpetuals arena, Polymarket’s exact roadmap remains guarded, including which specific assets it will cover and whether it will restrict access for US customers.
Why prediction markets are moving into perpetual futures
Why perps, why now?
The motivation to embrace this new feature comes down to basic market structure.
Traditional crypto spot trading, which is the simple buying and holding of digital assets, has decelerated from the frenzied peaks of previous market cycles, logging $18.6 trillion in volume last year.
Meanwhile, perpetual futures generated more than three times that amount. Data from CryptoQuant show that the global trading volume for crypto perpetual futures hit $61.7 trillion last year.
That volume disparity dictates corporate strategy. Platforms recognize that to maintain engagement during periods of low volatility, they must offer instruments that allow users to short the market, hedge portfolios, and employ leverage.
While prediction markets currently command significant capital, with all-time notional volume surpassing $150 billion, the episodic nature of event contracts cannot match the continuous, around-the-clock fee generation of a highly active derivatives order book.
Moreover, the broader financial technology sector is experiencing a rapid collapse of operational boundaries, with centralized platforms like Robinhood, Coinbase, and Gemini all embracing event-based offerings.
Mo Shaikh, co-founder of the Aptos blockchain network, noted that financial applications have historically trended toward consolidation, citing the expansions of legacy platforms like PayPal. However, he warned that forcing disparate user bases into a single application rarely succeeds seamlessly.
“The trader, the bettor, the long-term investor, the payments user, they show up for different reasons,” Shaikh said, adding that true value lies in controlling the underlying infrastructure. “Clearing, liquidity, identity, settlement, data, those layers can unify even if the frontends remain fragmented.”
Meanwhile, the shift among prediction market players is partially defensive.
Offshore decentralized exchange Hyperliquid, a dominant force in perpetual futures, recently encroached on the prediction sector by revealing plans to list its own event contracts.
As a result, the market is split on who holds the strategic advantage in the ensuing turf war.
Jiani Chen, a growth officer with the Solana Foundation, noted the technical disparities, arguing that decentralized derivatives exchanges have a much easier time adding prediction markets to their backend than prediction platforms do spinning up complex futures trading engines.
However, Kyle Samani, chairman of Forward Industries, dismissed the technical hurdles, arguing that customer acquisition is the true bottleneck for digital asset platforms. He said:
“It’s way harder to bootstrap liquidity and acquire normie users for prediction markets. Kalshi perps are going to crush.”
The legal fight is still about who gets to call it gambling
Legal battle over prediction markets
The aggressive product expansion coincides with an existential legal threat as state regulators are launching coordinated efforts to classify the prediction platforms as unlicensed casinos, rejecting the premise that event contracts are sophisticated financial tools.
On April 21, New York Attorney General Letitia James filed sweeping lawsuits against digital asset firms Coinbase and Gemini, demanding $3.4 billion in combined penalties and restitution.
James alleged the companies bypass state taxes and consumer protection laws by offering prediction markets to retail users, including minors.
State officials pointed to research by the National Institutes of Health linking early exposure to mobile betting with heightened risks of anxiety and financial distress, while noting American Psychological Association data showing severe mental health risks associated with gambling disorders.
James said:
“Gambling by another name is still gambling, and it is not exempt from regulation under our state laws and Constitution.”
The industry firmly rejects the gambling label, countering that the contracts are vital instruments for hedging geopolitical and economic risks.
The judiciary is already untangling the overlapping claims. A federal appeals court in Philadelphia ruled against New Jersey gaming regulators earlier this year, determining the CFTC held sole regulatory authority over Kalshi’s election and sports-related contracts.
This sequence of litigation reflects a deeply fractured regulatory perimeter that companies must navigate as they deploy new derivative products.
A bigger market, and a bigger regulatory target
The move into perpetual futures would further position prediction markets as part of mainstream financial infrastructure rather than a niche corner of online speculation.
That shift is already drawing attention from traditional finance. The Intercontinental Exchange, parent of the New York Stock Exchange, recently invested $2 billion in Polymarket, a sign that major market operators see commercial value in platforms built around event-driven pricing.
Supporters of the model argue that prediction markets are proving useful as both forecasting tools and trading venues.
In high-liquidity markets, Brier scores, a standard measure of probabilistic accuracy, have fallen as low as 0.0247 shortly before resolution, suggesting pricing errors narrow sharply as capital and participation deepen. Industry estimates also show that about 10% of proprietary trading firms are already active in event contracts, using them in part to hedge macro and policy risk.
That combination of data value and trading activity helps explain why platforms are racing to broaden their product mix.
Rob Hadick, managing partner at Dragonfly, framed the commercial logic bluntly:
“Owning your customer will be the only way to have longevity in this new world of broad financialization.”
However, not everyone sees perpetual futures as the natural next step.
Alex Momot, chief executive and co-founder of Peanut Trade, told CryptoSlate that the current push looks more like a response to tightening legal pressure than a durable product strategy.
He noted that regulators and some jurisdictions are moving against prediction markets, and as a result, these operators appear to be shifting closer to the crypto-exchange model, where the rules are clearer, and the risk of being classified as gambling is lower.
Momot argued that strategy may offer only limited relief. In his view, the deeper problem is liquidity. Without more depth, many of the sector’s most promising use cases, including hedging and insurance against real-world event risk, remain too small to scale.
He said the stronger long-term path may lie in index-style products, market aggregation, and pooled liquidity across events, structures that could make prediction markets look more like traditional derivatives or synthetic exposures.
That viewpoint points to a broader tension now shaping the industry. One camp sees perpetual futures as the fastest way to capture more trading volume and keep users active between headline-driven events. Another sees them as a tactical detour from the harder task of building deeper, more resilient liquidity.
Either way, the legal risk is rising. Dyma Budorin, founder and chief executive of CORE3, said the merging of prediction and derivatives markets is likely to draw closer scrutiny from regulators already struggling to define the sector.
He said:
“What we’re really seeing is a convergence toward perp-like behavior without the corresponding risk controls. If this trend continues, regulators won’t treat prediction markets as harmless forecasting tools, they’ll treat them as derivatives platforms operating outside the rules. And historically, that doesn’t end quietly.”
The New York litigation has already ensured that the fight over jurisdiction will remain central to the industry’s future. That battle could eventually reach the U.S. Supreme Court or force Congress to step in with a clearer statutory framework.
Until then, prediction-market operators appear willing to keep expanding through the uncertainty, betting that the commercial upside of perpetual futures is worth the legal exposure.
The numbers are in, and they are not pretty for everyday traders who bet on prediction markets.
Despite handling tens of billions of dollars in trades, these platforms appear to be leaving the overwhelming majority of users worse off financially.
Prediction markets have grown fast. By 2025, platforms like Polymarket and Kalshi were processing $28 billion in trading volume.
The idea behind them is simple: people bet on future events, and the odds that form are supposed to reflect what the public genuinely believes will happen.
Arizona Democrat Yassamin Ansari recently targeted both Polymarket and Kalshi, calling them “casinos where the rich and powerful are the house and everyone else is the chips.”
She posted on X that 99.96% of users lose everything while the top 0.04% walk away with billions.
Ansari slams the prediction market as a rigged casino Source: @RepYassAnsari
Her claim comes from a December 2025 on-chain analysis by a blockchain researcher known as DeFi Oasis.
That study found that less than 0.04% of Polymarket wallet addresses captured more than 70% of all realized profits, totaling $3.7 billion.
Analysts, however, pointed out that Ansari’s wording mixes up two separate figures. The 0.04% refers to who captured most of the winnings, not simply who won anything at all.
Ansari is co-sponsoring a bill called the BETS OFF Act alongside Sen. Chris Murphy of Connecticut and Reps. Greg Casar and Rashida Tlaib of Texas and Michigan, respectively. The bill would ban betting on events like war, terrorism, assassination, and government decisions.
Whatever the exact interpretation of the 0.04% figure, more recent data puts the problem in sharper focus.
The sharp drop, according to Sergeenkov, is tied to a flood of new and inexperienced users drawn in by the buzz around the November 2024 U.S. presidential election. “Less experienced users tend to trade less successfully,” he noted.
The 84.1% figure is also higher than what a 2025 study from researchers Felix Reichenbach and Martin Walther found.
Their paper put the losing share at around 70%. The difference, Sergeenkov explains, comes down to how the math is done.
His method accounts for wallet splits and merges, which earlier analyses left out. “When splits are left out, an address looks more profitable because one category of expenses is simply invisible,” he said.
The numbers behind the losses
A deeper look at the data shows just how rare meaningful earnings are on these platforms. Of 2.5 million wallets studied, only 2% had ever made more than $1,000 in total. Just 0.32% had cleared $10,000, and only 840 wallets, that is 0.033%, had earned more than $100,000.
The average trade on Polymarket is $89, and 80% of traders never place a bet larger than $500 on average.
The idea of replacing a regular paycheck through trading appears almost out of reach. The average monthly salary in the United States is roughly $5,000. Only 0.98% of traders ever hit that mark in a single month.
The number who managed it for 12 months straight: just 35 out of 2.5 million people.
The findings carry weight at a time when major financial institutions have moved in.
The Intercontinental Exchange, which owns the New York Stock Exchange, completed a $2 billion deal with Polymarket in March. Kalshi recently raised $1 billion, pushing its valuation to $22 billion.
The BETS OFF Act and a separate bill called the Death Bets Act, introduced by Rep. Mike Levin, are not widely expected to pass in the current Congress. Still, observers say the push for stronger protections for everyday users is not going away.
A Las Vegas online casino company has struck a deal with Crypto.com to offer prediction market contracts in the U.S., entering what could become a trillion-dollar industry.
High Roller Technologies (NYSE: ROLR) is the company behind the High Roller and Fruta casino brands. It has signed an agreement with Crypto.com’s derivatives arm, known as CDNA. U.S. customers will be able to trade event-based contracts across finance, sports, and entertainment.
It’s the company’s first move into prediction markets, a space that’s been attracting serious money. Analysts have floated projections of $1 trillion or more in annual U.S. trading volume if the market matures, with global figures potentially higher.
Crypto.com co-founder and CEO Kris Marszalek cited High Roller’s existing platform as the draw. “Together, we believe we can expand access to regulated event contracts in the United States through a differentiated and highly scalable offering,” he said. High Roller CEO Seth Young said the company has spent months preparing for the launch.
Partnership creates new revenue channels
The arrangement designates Crypto.com and its affiliates as prediction contract suppliers across High Roller’s U.S. distribution network. High Roller (NYSE: ROLR) plans to operate through the structure, which is expected to generate additional revenue streams for the company.
CDNA is already registered with the CFTC as both a designated contract market and a derivatives clearing organization. High Roller plans to register as a CFTC Introducing Broker and connect with Crypto.com’s CFTC-registered Futures Commission Merchant.
Rivals attracting billions in investment
The news comes during a frenzy of investment in the prediction market space. Rival platform Kalshi just hit a $22 billion valuation after raising roughly $1 billion, led by Coatue Management, double its December valuation, which drew backing from Andreessen Horowitz, Sequoia, Ark Invest, and Paradigm.
The company’s rise accelerated after winning a court fight with the CFTC in May 2025 that cleared it to offer election contracts, taking it from $2 billion to $22 billion in under a year.
Polymarket closed a $1.6 billion investment from Intercontinental Exchange, the NYSE’s parent company, fulfilling a commitment ICE first made in October 2025 when it valued Polymarket at $9 billion. ICE also plans to buy up to $40 million in Polymarket securities from existing holders.
The initial ICE commitment reached as high as $2 billion, with $1 billion deployed upfront. The additional $600 million brings ICE’s total obligation to completion.
High Roller (NYSE: ROLR) raised about $25 million in January through a direct share offering, selling roughly 1.9 million shares at $13.21 apiece. The placement, handled by ThinkEquity, closed on January 21. Proceeds are going toward marketing, expansion, product development, and operations.
On April 1, the NYSE American confirmed the company had resolved a prior stockholders’ equity deficiency, having demonstrated compliance for two consecutive quarters. The compliance indicator on its ticker was removed that morning. The company remains under standard listing oversight going forward.
High Roller’s platform hosts more than 6,000 games from over 90 providers.
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