The sports betting industry is entering 2026 in a moment of rapid but uneven change, with prediction markets now the central disruptor.
In the past week, analysts have focused on the rise of event based prediction markets such as Kalshi and Polymarket, which are competing directly with traditional sportsbooks for football and other sports volume. One equity research note released Wednesday estimated that about 5 percent of legal U S sports betting handle has been cannibalized by prediction markets, roughly 8 billion dollars on an annualized basis, against a projected 150 billion dollars in 2025 sportsbook handle.[1] This is more cannibalization than previously expected, but the analyst described the impact on major listed operators as modest rather than existential.[1]
At the same time, growth numbers on the prediction side are dramatic. Kalshi’s volume expanded from hundreds of millions in August to tens of billions of dollars by year end, with around 90 percent of December activity tied to sports, especially college football and the NFL playoff race.[2] In a single recent week, Kalshi processed over 2 point 3 billion dollars in contracts across more than 27 million trades.[2] Yet month over month growth into late December slowed, raising questions about whether the market is approaching a near term saturation point.[1]
Strategic partnerships are redefining distribution. Polymarket just secured an exclusive deal with Dow Jones to stream its real time odds across platforms like the Wall Street Journal and Barrons, after earlier marketing alliances with the NHL and UFC.[4][11][12] Kalshi, for its part, already works with CNN, CNBC, Robinhood, and Webull, and has its own NHL partnership.[1][2][8]
Traditional operators are responding by launching their own prediction products and targeting non sportsbook states. DraftKings, FanDuel, and Fanatics now all operate prediction apps in parallel with their sportsbooks, often in partnership with exchanges such as CME or Crypto dot com.[1][8] According to analysts, these three brands represent more than 75 percent of regulated U S betting handle and can mostly offset lost sportsbook volume with prediction revenue.[1]
Compared with earlier reporting from late 2025, the key shift over the last several days is that prediction markets are now framed less as an existential threat and more as a fast growing adjacent product that reshapes, rather than shrinks, the overall gambling wallet.
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