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This is our roundup newsletter. A weekly curated list of the biggest things happening in prediction markets.
Our Q2 2026 report is still up. Prediction markets traded $111 billion in the quarter, more than 2024 and 2025 combined, across 70 pages of charts, and it is free. Read below 👇
Last week we published Public Launch AI Agent Powered Prediction Markets Without Sports, our conversation with co-founder and co-CEO Leif Abraham on why Public launched event contracts with no sports or entertainment markets, and on agents that use a market's probability as the trigger for a trade elsewhere in a portfolio.
Check it out if you haven’t already here!
Kalshi was valued at $22 billion in its May 2026 funding round. PitchBook analysts now value it at $30.4 billion in their base case, with a $22.8 billion bear case and a $42.1 billion bull case, Fortune reported on 24th September 2026. Investors are eyeing an initial public offering as early as 2027.
How much of that upside Kalshi keeps depends on whether states win the fight to regulate its sports contracts, a dispute that could reach the Supreme Court.
PitchBook say an adverse ruling would hurt Kalshi but would not be existential. A 25% cut in sports and exotics fees, which make up 82.4% of Kalshi's event fees this year, would remove $642 million from their 2026 forecast and $1.4 billion from 2030.
PitchBook sees perpetual futures as Kalshi's most promising business outside sports, at $275.7 million of net revenue by 2030, but say that would be "hardly enough to meaningfully offset a total loss of sports-related revenue".
That makes Kalshi's move towards margin trading unsurprising. If its upside depends partly on growing beyond sports, making eligible event contracts more accessible to institutional traders is a logical next step. On 22nd September 2026, its clearinghouse asked the CFTC to allow margin trading on those contracts for qualified traders.
The proposal excludes sports, culture and mention contracts, and would let eligible institutions put up less capital upfront than today's fully collateralised model requires.
Approval is not guaranteed, but it could make non-sports markets more attractive to larger traders.
DraftKings ($DKNG ( ▼ 3.25% )) shares fell 4% to $20.92 after chief executive Jason Robins told a Wells Fargo conference on 22nd September 2026 that the company expects to lift marketing and customer promotions, and may pull forward next year's investment.
Robins said DraftKings' prediction-markets product is approaching a "double-digit share of consumer volume", and that sportsbook handle was up 15% year on year at the start of the NFL season.
Source: The Prediction
DraftKings' own exchange, DKeX, traded $594 million of notional volume in the week to 26th September 2026, up from $142 million in the week to 5th September 2026 and under $8 million a week through mid-August 2026.
DraftKings first sold prediction markets on Crypto[dot]com's CDNA rails in May 2026 before moving more of its flow over to DKeX.
Flutter ($FLUT ( ▼ 7.23% )), which owns FanDuel, fell 1% the same day, and Robinhood ($HOOD ( ▼ 1.95% )) rose 0.8%.
A Fullstory survey of more than 1,000 US consumers, reported by Fortune on 25th September 2026, found 35% of sportsbook users now use sportsbooks less because of prediction markets.
Source: InGame
Traders taking the yes side of Kalshi parlays priced at 1 cent or less have lost well over half of what they staked, InGame reported on 25th September 2026.
$112.5 million has been staked on those parlays since June 2026. Thousands of multi-game parlays trade at around 0.1 cents, a one-in-a-thousand chance, when the odds of their legs put them closer to one in a billion, and no parlay longer than 1 in 28,000 has won.
Across all combos, InGame put the margin built into Kalshi's parlay prices at 26.4%, against 23.9% at DraftKings, before Kalshi's own transaction fees. Users on Kalshi's app can only take the yes side of a parlay, so the other side is taken by market makers.
Our own analysis in Do Parlays Pay the Bills? Part 3 found the same drift. Kalshi parlays priced under 2 cents went from 42.6% of parlay notional volume in October 2025 to 62.3% in August 2026, and each $1 staked on a parlay shows up as roughly $11.70 of reported volume, against $2.30 on the rest of Kalshi.
As we covered last week, Europe's top regulator had already questioned Polymarket's and Kalshi's EU access.
Now Polymarket are asking European regulators to treat their contracts as financial instruments under MiFID rather than gambling, the Financial Times reported on 22nd September 2026.
MiFID status would let Polymarket seek one authorisation as a financial firm and passport it across the EU, instead of applying for a gambling licence in each member state.
Polymarket's legal team and advisers from A&O Shearman and Hanbury Strategy met ESMA chair Verena Ross in June 2026, and executives also met FCA chief executive Nikhil Rathi.
"As we grow our presence and expand globally, we are committed to engaging early," Polymarket said.
If the contracts are classed as financial instruments, EU restrictions on binary options could apply to retail customers, and regulators across Europe have already acted against the product.
The UK has banned binary options for retail customers since 2019.
France ordered internet providers to block Polymarket in July 2026.
Spain opened a probe into Polymarket's legality in May 2026.
New York Attorney General Letitia James and Governor Kathy Hochul sued QCX LLC, which trades as Polymarket US, on 24th September 2026, alleging it runs an unlicensed gambling operation and lets 18- to 20-year-olds trade in a state where the gambling age is 21. Polymarket filed their own suit in federal court that evening.
The next day, the Sixth Circuit ruled unanimously that Ohio and Tennessee can apply their gambling laws to Kalshi's sports contracts.
Judge Julia Smith Gibbons wrote for the panel, "There is no conceivable reason why the market might need to know the probability that a broadcaster says a random word on air."
That makes two appeals courts for the states, the Sixth and the Ninth, against one for Kalshi, the Third. As we previously covered, a split like that is the standard route to the Supreme Court, and New Jersey's Attorney General asked it to take the case on 2nd September 2026.
Source: The Prediction
Source: The Prediction
🗞 General
Polymarket's bank-failure markets draw FDIC scrutiny (Read more here)
Kalshi defend their San Francisco Giants partnership after fan backlash (Read more here)
Matt Levine on Kalshi's plan to offer margin (Read more here)
Tax professors urge the IRS to treat most event contracts as gambling (Read more here)
🤝 Announcements & Partnerships
Kalshi ask the CFTC to allow margin trading for institutional traders (Read more here)
Polymarket partners with OpenWorlds to let AI agents trade on their markets (Read more here)
Kalshi become a founding partner of the Atlantic Council's Power of Sports Center (Read more here)
Underdog adds Eventus's Validus platform for trade surveillance (Read more here)
FairPlay Sports Media invest in WagerWire to bring Wire Markets to its audience (Read more here)
💰 Funding & M&A
functionSPACE raise a $1.7 million pre-seed round, led by Maven 11 and Blockwall, to build markets that price numerical outcomes (Read more here)
⚖️ Regulation & Legal
How Kalshi helped write North Carolina's 6% prediction market tax, and why it helps them in court (Read more here)
The CFTC examine Kalshi's ether perp trades, and Kalshi say they have not been contacted (Read more here)
The CFTC warn that mention markets carry heightened manipulation risk (Read more here)
The National Council on Problem Gambling's executive director resigns amid fallout from Kalshi's membership (Read more here)
Mexico's football federation sue Kalshi over Liga MX trademarks (Read more here)
Gaming-state lawmakers urge the Supreme Court to take New Jersey's Kalshi case (Read more here)
Four New Mexico tribes ask a federal judge to block Kalshi on their lands (Read more here)
Predicted is written by Pet Berisha and Omar El Safy. Every edition, our quarterly State of Prediction Markets reports and more at predicted.co.
Disclaimers
This newsletter is for informational purposes only and is not financial, business or legal advice. These are the author's thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor. Any companies, platforms, markets or projects mentioned are for illustrative purposes unless specified.
The contents of this newsletter should not be used in any public or private domain without the express permission of the author.
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Please note, the services and products advertised by our sponsors (by use of terminology such as but not limited to; supported by, sponsored by or brought to you by) in this newsletter carry inherent risks and should not be regarded as completely safe or risk-free. Third-party entities provide these services and products, and we do not control, endorse, or guarantee the accuracy, efficacy, or safety of their offerings.
When you trade on prediction markets (including event contracts, opinion markets and other speculative instruments) your capital is at risk. Risks include price volatility, loss of capital, illiquidity, complexity, evolving regulation and lack of protection. Many prediction market operators do not currently operate in a fully regulated industry, and availability varies by jurisdiction. You may not be protected under financial compensation schemes typically afforded to investors dealing with regulated entities. Nothing in this newsletter constitutes a recommendation to place, hold, or close any position on any market.
