Prediction markets - Kalshi and Polymarket

[northbound]

Meanwhile, liquidity on the prediction markets is absolutely staggering—sometimes you can see $10 million available to trade immediately.

Not always.

Let's take Polymarket.

If you want to place a bet, it's very easy and there's tons of liquidity but as a taker you pay a fee.

But if you want to enter with a limit order to pay zero fees then you'll often have to wait a very long time to get filled by a taker.

Like on Betfair.

But I agree with you that Betfair shot themselves on the foot over the years.

[ForFolksSake]

'UK weighs lifting ban on US prediction markets' - the Times.

Can't read as behind a paywall so don't know if there's actually any evidence of this happening but would be an absolute killer blow to Betfair/BD/Matchbook etc.

How many years does the Betfair Exchange realistically have left? Matched volume appears to have collapsed and may be at its lowest level ever. Far too often, even in major sports, I find myself first in the queue without getting matched for more than pennies.

Perhaps the smartest move would be to sell the Exchange to Kalshi or anyone willing to buy it before it is too late. Betfair may have no real option left except to start paying major traders and institutional clients to provide liquidity, but the biggest prediction markets already do that. With the Exchange now available in so few countries, what could Betfair possibly offer that would persuade them to come?

Many people seem to blame affordability checks and other responsible-gambling restrictions, but Betfair destroyed its liquidity by withdrawing from one country after another. Meanwhile, liquidity on the prediction markets is absolutely staggering—sometimes you can see $10 million available to trade immediately. Betfair did not lose its dominance because people stopped wanting to trade; it lost it by shutting the doors on its own customers.

... Matched volume appears to have collapsed ...

Largest today

Pre-Play = 275865

In-Play

20260907_HiVol.JPG

[iambic_pentameter]

'UK weighs lifting ban on US prediction markets' - the Times.

Can't read as behind a paywall so don't know if there's actually any evidence of this happening but would be an absolute killer blow to Betfair/BD/Matchbook etc.

Hi Naffman - here's the article:

The City regulator has held talks with trading platforms about the possibility of relaxing a ban on prediction markets amid the rapid rise of UK consumers using American websites such as Kalshi and Polymarket.

The Financial Conduct Authority (FCA) has taken soundings on a possible lifting of the block on prediction platforms, which allow users to place wagers on the outcome of events including financial index movements, sports matches and political elections.

The FCA bans financial prediction markets for retail investors because they are considered binary options — a trade on whether an event will happen or not. The ban has been in place since 2019 over concerns that customers could incur heavy losses using the products and that traders may not understand the risks involved.

Prediction markets are booming. But is the party about to stop?
However, industry insiders have been seeking to end the ban by presenting the FCA with evidence of millions of UK consumers using prediction markets overseas, and warning that shifting the business offshore leaves traders exposed to unregulated firms. Individuals are able to trade on foreign-based platforms using a virtual private network, or VPN, to mask the real location of their phone or computer. The Times understands that multiple stakeholders have made representations to officials as part of the lobbying push.

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One City source told The Times: “It’s like most prohibitions — they are largely ineffective. The concerning thing is that regulators who have an obligation to prevent consumer harm are by their actions effectively driving consumers to operators with no regulatory standards at all.”

Prediction markets seeking to offer both financial and political bets would need to clear multiple hurdles to set up operations in the UK market. Firstly, providers would need an end to the binary option ban from the FCA to sell bets on financial movements. Secondly, they would need to secure a gambling licence to offer wagers on political events, such as the outcome of the midterm elections in the US.

Ryan Bourne: UK must embrace prediction markets as a bet on the future
The Times understands that the FCA is continuing to review the regulations for speculative investments. The regulator sought the industry’s views on expanding consumer access to trading products through a consultation that took place earlier this year.

In America, demand for prediction markets has been booming. Total trading volume reached $51 billion last year and is anticipated to rise to $240 billion this year, according to Bernstein Research, which forecast a volume of $1 trillion by 2030.

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Kalshi and Polymarket have achieved valuations of $22 billion and $21 billion respectively amid a surge in demand for their platforms, and have both enlisted Donald Trump Jr, the US president’s eldest son, as an adviser. Meanwhile, American operators from the gambling and cryptocurrency sectors have started shifting into the industry, with DraftKings, Robinhood and Coinbase also launching their own prediction products.

However, regulatory uncertainties persist in America, where it remains unclear whether the activity should be overseen by the Commodity Futures Trading Commission, which regulates derivatives, or if operators must also comply with state gaming laws.

When introducing a binary option ban seven years ago, the FCA said the rules addressed “widespread concerns about the inherent risks of these products and the poor conduct of the firms selling them”. The FCA’s more recent consultation paper discussing speculative investments warned that “purely speculative products tend to cause net harm to consumers and do not typically support growth in the real economy”.

The FCA declined to comment.

Iambic