Kalshi raised $1 billion at a $22 billion valuation last month, making it worth more than Flutter Entertainment (NYSE:FLUT) and DraftKings (NASDAQ:DKNG), the two companies whose business it’s trying to eat.

A new note from Bernstein analysts led by Gautam Chhugani projects prediction market volumes will reach roughly $240 billion in 2026, and reach $1 trillion by 2030.

The analysts describe prediction markets as evolving into “broader information markets” spanning economics, culture, corporate activity, and financial indicators, with sports serving as the entry point for mainstream adoption rather than the endgame.

Robinhood Is The Distribution Engine

Robinhood Markets (NASDAQ:HOOD) is the anchor partner powering Kalshi’s growth, listing over 1,000 prediction market contracts.

Prediction markets are now Robinhood’s fastest-growing product line by revenue, with more than 9 billion contracts traded by over 1 million customers.

Bernstein rates both Robinhood and Coinbase Global (NASDAQ:COIN) as outperform, with price targets of $160 and $510 respectively. Coinbase plans to add prediction markets as part of what it calls its “everything exchange” vision.

Kalshi vs. Polymarket Is The Real Battle

Bernstein identifies the rivalry between Kalshi and Polymarket as the central fight. Kalshi built from the regulated side with CFTC oversight from the start.

Polymarket came from crypto, acquired CFTC-licensed exchange QCEX, and relaunched in the U.S. last year. Intercontinental Exchange (NASDAQ:ICE) backed Polymarket with up to $2 billion at a $9 billion valuation, and the company is now reportedly targeting a $20 billion valuation.

The $22 Billion Question

Kalshi’s $22 billion valuation, raised in March with Coatue Management leading a $1 billion round, prices in the bull case. But the company is simultaneously fighting more than 20 state-level lawsuits, under increasing political and legal scrutiny.

Arizona filed criminal charges last month.

The Third Circuit ruled April 6 that New Jersey cannot enforce gambling laws against Kalshi, but the Ninth Circuit went the other way on Nevada. The circuit split is live and may eventually reach the Supreme Court.

The question that determines whether the $1 trillion projection is a forecast or a fantasy is simple: are prediction markets financial instruments or gambling?

If they’re financial instruments, Kalshi operates nationwide on a single federal charter. If they’re gambling, it needs 50 state licenses and that $22 billion valuation looks very different.

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