In a move that signals institutional validation of the once-fringe prediction market industry, proprietary trading giant Jump Trading is poised to acquire stakes in market leaders Kalshi and Polymarket. The deal, reported by Bloomberg on February 10, 2026, comes as prediction market trading volume explodes from $15.8 billion in 2024 to $63.5 billion in 2025—a staggering 4X growth that has caught the attention of both Wall Street and Washington regulators. With Kalshi now valued at $11 billion and Polymarket at $9 billion, what began as academic curiosities have transformed into multi-billion dollar platforms where traders bet on everything from election outcomes to sports results, blurring the lines between financial markets and gambling.
How Jump Trading's Entry Validates the $20 Billion Prediction Market Sector
Jump Trading, the Chicago-based high-frequency trading firm with significant cryptocurrency operations, will receive equity stakes in both Kalshi and Polymarket in exchange for providing liquidity on their platforms. According to Bloomberg's sources, Jump's stake in Kalshi will be fixed, while its ownership in Polymarket will grow based on the trading capacity it ultimately provides. This arrangement follows a familiar pattern in financial markets where market makers receive equity for providing essential liquidity, but its application to prediction markets marks a watershed moment for the industry.
The timing couldn't be more significant. Kalshi recently closed a $1 billion Series E funding round at an $11 billion valuation in December 2025, more than doubling its valuation in just two months. Polymarket, meanwhile, secured a strategic investment of up to $2 billion from Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, valuing the platform at $9 billion. Together, these platforms have processed over $37 billion in wagers in 2025 alone, according to The Block's 2026 Digital Assets Outlook Report cited by Euronews.
Timeline: From Academic Curiosity to $63.5 Billion Industry in Two Years
The prediction market explosion has unfolded with remarkable speed. In 2024, the total trading volume across all prediction platforms stood at $15.8 billion, according to CertiK's 2026 Skynet Prediction Market Report. By the end of 2025, that figure had quadrupled to approximately $63.5 billion, with liquidity concentrating around three main platforms: Kalshi, Polymarket, and traditional sports betting operators expanding into prediction markets.
The acceleration began in earnest after the 2024 US presidential election, when prediction markets consistently outperformed traditional polls in forecasting outcomes. Their accuracy was further demonstrated during the 2025 German snap election, cementing their reputation as reliable forecasting tools. This perceived accuracy triggered a cascade of institutional interest: first came media partnerships, with CNN announcing a groundbreaking deal to integrate Kalshi's prediction market data into its broadcasts in December 2025, followed quickly by CNBC.
Then came the big money. ICE's $2 billion investment in Polymarket in October 2025 marked the first major institutional validation. Kalshi's $1 billion Series E round in December 2025 brought its valuation to $11 billion. Now, Jump Trading's entry as a market maker with equity stakes represents the next phase: institutional infrastructure building for what many are calling "the future of forecasting."
Why Prediction Markets Matter: The Good, The Bad, and The Regulated
Prediction markets function similarly to financial exchanges but with a crucial difference: instead of trading stocks or commodities, participants buy and sell binary contracts on the outcomes of future events. A contract priced at $0.50 implies a 50% probability of the event occurring, paying out $1 if it happens and $0 if it doesn't. This creates a real-time, money-backed consensus forecast that many believe captures collective wisdom more accurately than polls or expert opinions.
Terrence Duffy, CEO of CME Group, the world's leading derivatives exchange, acknowledged this shift during a third-quarter earnings call, describing prediction markets as "a legitimate domain of speculation and information aggregation that our clients are demanding." The sentiment reflects a growing recognition that these markets provide valuable signals about everything from election probabilities to corporate earnings.
However, the rapid growth has raised serious concerns. "We're dealing with a new animal," said New York State Assemblymember Clyde Vanel in an interview with CBS News New York. Vanel, a Democrat from Queens, has introduced legislation to ban trading on many types of predictions, including sports and politics. His concerns were amplified in early December 2025 when a Polymarket trader nicknamed "AlphaRaccoon" won 22 out of 23 bets related to Google's Year in Search rankings, sparking insider trading allegations.
Even more troubling was the case of an anonymous Polymarket user who placed $32,000 on the downfall of Venezuelan dictator Nicolás Maduro hours before President Trump announced his capture by U.S. forces. The trader made over $400,000, leading financial experts to cry foul. "You're not allowed to use material, nonpublic information to trade in these markets," said D.J. Hennes of accounting firm KPMG in the CBS News interview. "If you know something is going to happen through your job, your friend, whatever it may be, and you bet on that and the government finds out about it, you could be prosecuted. That's fraud."
Where Things Stand Now: Regulatory Whiplash and Market Momentum
The current regulatory landscape presents a study in contradictions. On one hand, the Commodity Futures Trading Commission (CFTC) under Chairman Michael Selig has taken a cautiously permissive approach, withdrawing a Biden-era proposal that would have banned sports and political event contracts. "The CFTC scrapped both its 2024 proposal to ban event contracts and a 2025 staff advisory that had warned firms away from sports-related prediction markets," reported Yahoo Finance on February 5, 2026.
Simultaneously, the CFTC has signaled imminent rulemaking to establish clearer guidelines for prediction markets, acknowledging they've moved "from the margins of academia into a federally supervised market structure," as noted in Sidley Austin's analysis of CFTC communications. This federal permissiveness contrasts sharply with state-level crackdowns. The New York State Gaming Commission sent Kalshi a cease-and-desist letter in January 2026, alleging the company offers sports betting without a state license. Similar actions have been taken in Tennessee and Maryland, though federal judges have temporarily blocked enforcement in some cases while lawsuits proceed.
Kalshi has responded with a multi-pronged strategy: legally challenging state actions while supporting federal legislation. The company's CEO has endorsed Bronx Democratic Congressman Ritchie Torres's bill to ban politicians from insider trading on prediction markets—though as KPMG's Hennes notes, such trading is already illegal. "Kalshi explicitly prohibits insider trading of any form," the company stated to CBS News, "including government employees trading on prediction markets related to government activity."
What Happens Next: The Road Ahead for Prediction Markets
The prediction market industry stands at a critical inflection point. With Jump Trading's entry providing institutional liquidity and ICE's distribution network bringing Polymarket data to traditional financial institutions, the infrastructure is being built for mainstream adoption. CME Group's public acknowledgment of client demand suggests traditional derivatives exchanges may soon offer their own prediction market products, potentially legitimizing the sector further.
However, significant challenges remain. The insider trading incidents have exposed vulnerabilities that could undermine market integrity. The European Union continues to ban prediction markets in most member countries, citing gambling concerns. And the fundamental question—are these markets legitimate forecasting tools or sophisticated gambling platforms?—remains unresolved in both public perception and regulatory frameworks.
For investors, the opportunities are as clear as the risks. The 4X growth in trading volume suggests strong user adoption, while institutional investments at multibillion-dollar valuations indicate serious money believes in the sector's future. Yet regulatory uncertainty persists, and the thin line between insider information and clever forecasting creates legal peril. As State Assemblymember Vanel warned, "Whether it be the NBA or MLB, or what have you, there are charges against certain players that had certain behavior to affect a bet here and there, and that's just sports. Imagine what happens in politics. Imagine that happens in policy to actually affect everyday people."
The Bottom Line: Key Points to Remember
Prediction markets have evolved from academic experiments to a $63.5 billion industry in just two years, with Kalshi ($11B valuation) and Polymarket ($9B valuation) leading the charge. Jump Trading's equity-for-liquidity deal signals institutional validation, while CFTC's withdrawal of a proposed ban suggests federal regulators are moving toward accommodation rather than prohibition. However, state-level crackdowns and insider trading concerns present significant headwinds. Media partnerships with CNN and CNBC have mainstreamed prediction data, but questions about market integrity and regulatory classification remain unanswered. For investors and observers alike, the prediction market boom represents one of the most fascinating—and contentious—developments at the intersection of finance, technology, and gambling in recent memory.
