The Signal

Kalshi’s category mix is no longer telling a sports-only growth story. A new a16z crypto chart highlights that sports trading was near $3 billion in weekly volume around Kalshi’s March research conference, roughly 80% of Kalshi’s total volume — but sports’ share of total volume was at an all-time low because other categories were growing faster.

The delta from last week’s Wintermute and CFTC-perp stories is that prediction markets are widening on both axes: more institutional liquidity and more non-sports use cases. Sports remains the mass-market acquisition wedge, but Kalshi’s founders pointed to entertainment, crypto, politics, and culture as categories with stronger user growth and better volume-retention cohorts.

For platforms, the strategic question is shifting from “Can sports bootstrap liquidity?” to “Can non-sports markets retain users after the sports calendar rotates?” That favors venues with broad market creation, reliable settlement, tighter spreads, and category depth beyond a few headline events.

The Mechanism

• Sports is functioning as distribution, not the whole business. Kalshi’s sports markets bring in users through familiar, scheduled events, but the more valuable signal is whether those users migrate into economics, politics, entertainment, crypto, and culture contracts.

• Non-sports retention changes platform economics. Sports volume can be seasonal and promotion-heavy. Longer-tail markets give venues more recurring engagement, more listed contracts, and more chances to monetize attention around news cycles that sportsbooks do not cover.

• Kalshi benefits if the category mix keeps broadening. As a CFTC-regulated venue, Kalshi can pitch non-sports expansion as financial-market infrastructure rather than gambling substitution — especially after last week’s CFTC approval of Kalshi’s Bitcoin perpetual futures contract. [CoinDesk, Fortune]

• Polymarket remains strong in breadth, but integrity scrutiny is rising. Its offshore, crypto-native structure supports fast market creation across politics, culture, tech, and crypto, but the alleged Google insider-trading case shows how non-sports markets can surface information advantages that regulators and platforms must police. [CoinDesk, CBS News]

• Market makers make the long tail more viable. Wintermute’s entry matters most outside mega-events: thinner categories need continuous quoting to reduce slippage and make smaller markets feel tradable. That turns category expansion into an infrastructure problem, not just a listing problem.

• The venture narrative is catching up to the operating data. a16z’s broader argument is that prediction markets are information markets, not just betting products — a framing that helps explain why investors are watching AI benchmarks, product launches, macro releases, entertainment awards, and corporate events as potential contract categories. [a16z crypto]

The Landscape

Market Position: Kalshi’s latest category data suggests sports is still the volume anchor, but not the fastest-growing segment. At the March Kalshi Research Conference, sports was near $3 billion in weekly volume and about 80% of total platform volume, leaving a meaningful 20%+ already flowing through non-sports categories. That matters because the next competitive layer is not just total volume; it is breadth of liquid markets, user retention by category, and whether users acquired through sports continue trading news, macro, crypto, entertainment, and culture contracts.

Regulatory Environment: The regulated/offshore split remains the central industry fault line. Kalshi is using CFTC oversight to expand from event contracts into federally supervised derivatives, including the newly approved Bitcoin perpetual futures product. Polymarket continues to show the power of permissionless market breadth, but the alleged $1 million insider-information trading case tied to a Google employee underscores the compliance burden that comes with markets on specific corporate or tech outcomes. The policy question is becoming more granular: not whether prediction markets exist, but which categories regulators allow, how platforms monitor material nonpublic information, and whether federally regulated venues can list enough non-sports contracts to compete with offshore breadth.

Key Data

• Nearly $3 billion: Kalshi sports trading reached almost this level in weekly volume around March Madness, according to a16z’s writeup of Kalshi conference data. [a16z crypto]

• ~80%: Sports represented roughly this share of Kalshi total volume at that point — even while its share was reportedly at an all-time low because other categories were growing faster.

• 20%+: Non-sports categories already accounted for the remaining share of Kalshi volume, with entertainment, crypto, politics, and culture cited as stronger user-growth and retention areas.

• $20 billion+/month: Recent sector turnover has moved above this level, helping attract professional liquidity providers such as Wintermute into prediction-market quoting.

• $1 million: Federal allegations in the Google/Polymarket case put a dollar figure on the market-integrity risk in non-sports information markets. [CBS News]

What’s Next

The next industry catalyst is whether platforms can prove that sports-acquired users become multi-category traders. Watch Kalshi’s post-March category mix, Polymarket’s response to insider-information scrutiny, and Wintermute-style market-maker coverage across thinner non-sports books. If spreads tighten outside sports and retention holds, the market narrative shifts from “prediction markets as sportsbook adjacency” to “prediction markets as a new retail information-trading layer.”

Predict This covers the evolution of prediction markets — platforms, regulation, volume, and methodology. For questions or tips: reply to this email.

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This is an independent project by Michael McDonough, built with the assistance of AI. Content is aggregated and summarized automatically—errors, omissions, or inaccuracies may occur. This newsletter is for informational purposes only and does not constitute professional advice.