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May Prediction Market Volumes Hit Record as Kalshi Share Grows, Macquarie Says

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May Prediction Market Volumes Hit Record as Kalshi Share Grows, Macquarie Says

Prediction markets logged record volumes in May, with leader Kalshi growing its market share, though certain regulatory issues continue to be core to the industry's long-term sustainability, Macquarie said in a note e-mailed Wednesday.

Prediction market volumes amounted to about $31.17 billion last month amid continued momentum, with market leader Kalshi boosting its implied volume market share to 57% from 50% in April, according to Macquarie.

On Tuesday, DraftKings (DKNG) reported a 34% month-over-month surge in annualized predictions volumes in May to $3.1 billion. Kalshi's total volume was about $17.91 billion, with almost half coming from sports contracts, Macquarie said.

"We note that it is still very early days for (DraftKings') predictions launch, and we expect its market share to consistently rise through the year," Chad Beynon, senior gaming, lodging and theatres analyst at Macquarie, said in a note to clients.

Recently, Rush Street Interactive (RSI) applied to become a regulated designated contract market, joining the likes of Kalshi and DraftKings.

"The move provides a potential federally regulated alternative if state sports betting faces tighter regulation," Beynon said. "More broadly, it highlights a growing openness among gaming operators toward regulated event-contract platforms."

With online sports betting operators now leaning into their own prediction market products, the main questions for investors continues to be around the long-term product overlap between the two, as well as potential regulatory changes, according to the note.

Earlier this week, Sportradar Group (SRAD) signed a multiyear global agreement with Kalshi, under which it becomes an official data and solutions provider for Kalshi.

The deal marks the "first meaningful step" by Sportradar into the regulated prediction market space, according to Macquarie. It also reinforces the Sportradar and Genius Sports (GENI) "positioning as a 'picks-and-shovels' infrastructure provider to both traditional sportsbooks and now (prediction markets)," Beynon said.

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