Polymarket vs Kalshi: Who is the king of prediction markets?

Author: Changan, Biteye Content Team

A few days ago, many KOLs on X suddenly noticed that the badges symbolizing their partnership with Kalshi had disappeared from their accounts.

Prediction News reported on this incident, followed by a humorous screenshot: Polymarket’s official account quietly liked the article.

The business rivalry between Polymarket and Kalshi has been ongoing for a long time, and the prediction market is entering a true duopoly era.

On one side is the crypto-native Polymarket; on the other is Kalshi within the compliant financial system.

The essence of this competition isn’t about which company is stronger, but about: who will control the future pricing of information—Crypto or Wall Street.

Therefore, this analysis is worth doing. 👇

1. Business War Chronicle: From Regulatory Battles to Offline Confrontations

Over the past year, the competition has evolved from product battles to a three-dimensional war involving channels, regulation, and public opinion.

1. Valuation Race: Capital Counterattack in 41 Days

On October 7, 2025, Polymarket announced it received a $2 billion strategic investment from ICE, valuing the company at $9 billion.

Three days later, Kalshi announced a $300 million Series D funding round, with a valuation of $5 billion. The timing was so precise it’s hard to believe it was just a coincidence.

But Polymarket clearly isn’t planning to stop. On October 23, Bloomberg reported that Polymarket was in talks with investors to prepare for a new funding round, aiming to boost its valuation to $15 billion.

By November 20, Kalshi responded: completing a $1 billion financing, with its valuation jumping directly to $11 billion, led by Paradigm. Not only did it surpass Polymarket’s previous valuation of $9 billion, but it also rapidly approached the $15 billion funding target. And this was only 41 days after its last D round.

2. Cultural Breakthrough: Traffic Competition

On September 24, 2025, “South Park” Season 27 Episode 5 “Conflict of Interest” released a trailer featuring prediction market content.

As soon as the news broke, both platforms realized an opportunity: this was the first time prediction markets entered mainstream culture’s view. Whoever could convert this attention into trading volume first would gain a bigger slice of the breakout bonus.

Kalshi and Polymarket quickly launched a batch of markets highly related to the storyline, allowing users to bet on plot developments immediately.

On the day of the episode’s release, the Kalshi team collectively changed their profile avatars to South Park cartoon styles and flooded X, embedding their brand into the day’s hot topics. Neither platform missed any marketing opportunity to turn trending topics into trading activity.

3. Ecosystem Accounts and Badge Wars

As user numbers surged, both Polymarket and Kalshi nearly simultaneously launched affiliate account programs in late 2024, attaching badges to KOLs, traders, and ecosystem projects on X.

Polymarket moved faster: Trader badges verified active traders, encouraging them to share strategies and holdings on X to drive traffic. Builder badges targeted ecosystem projects, attracting developers to build applications on the platform and gain exposure through official endorsement.

Meanwhile, Polymarket also launched a $1 million Builders Incentive Program, directly incentivizing developers with real money to join the ecosystem.

Kalshi quickly followed with a broader badge system covering sports, culture, and trader verification, replicating this model in its stronger sports and mass-market segments.

Today, prediction market traders on Twitter either display Polymarket badges or Kalshi badges.

4. Physical Marketing Battles: Manhattan Free Goods War

On February 2, 2026, Kalshi announced on X that it would provide free food at Westside Market supermarket from noon to 3 pm the next day, with a maximum of $50 per person. The announcement drew long lines on-site, with students and low-income groups flocking in, creating a lively scene.

The next day, February 3, Polymarket responded swiftly, announcing the opening of its first pop-up free food event in New York, open to the public for five consecutive days. The rules were simple: customers could fill a tote bag with food and take it away, no conditions attached. At the same time, Polymarket announced a $1 million donation to Food Bank for New York City to help address food security issues across the city.

These two events played out back-to-back, with intense competition.

5. Regulatory and Political Resource Arms Race

Both sides’ lobbying machines in Washington never stopped, bringing in Donald Trump Jr. to rally Republican regulatory resources and to lay political chips in the public opinion arena.

But beneath the surface, the real battleground is in two dimensions: the regulatory loopholes of the CFTC and the legal battles in various state courts.

Polymarket, leveraging offshore structures to evade direct regulation, quietly laid groundwork in the US market by acquiring QCEX. Kalshi, on the other hand, chose to confront head-on, holding the first CFTC prediction market license, but this made it a target for state prosecutors—at least four states have filed lawsuits against it, accusing it of illegal local user betting.

This plain but fierce business war is no longer just about products but a full-scale battle for political capital and traffic monopoly.

2. Hardcore Comparison: Five Dimensions Analyzing the Two Giants

2.1 Trading Data Comparison: Disparate Growth in Political Cycles and Sports Calendars

As of February 2026, the total Notional Volume of the prediction market industry reached $127.5 billion, with actual traded volume at $69.9 billion, 2.49 million active users, and open interest exceeding $1 billion.

Polymarket and Kalshi together hold about 79% of the market share. Polymarket leads with a $56.07 billion Notional Volume, followed by Kalshi at $44.71 billion. In open interest, Kalshi slightly ahead at $474.01 million versus Polymarket’s $409.67 million, together accounting for over 85% of the total market OI.

Trend-wise, both rely heavily on event-driven growth. Polymarket’s OI surged to nearly $500 million around the 2024 US presidential election, then receded; Kalshi’s OI started rising sharply from the 2025 NFL season, reaching a peak at the end of 2025.

Both platforms are growing, but driven by different factors—one by political cycles, the other by sports schedules.

(Source: Dune, as of 2.26, 11:00)

2.2 Revenue Comparison: Proven Dynamic Fee Rates vs. Emerging Taker Fees

Their fee models are fundamentally different.

Kalshi

Uses probability-weighted dynamic fee rates: charges a fee based on contract prices, peaking at a 50% probability (50/50), decreasing toward 0 or 99. The maximum fee on a $100 trade is about $1.74, with an effective rate of approximately 1.2%.

In 2024, revenue was $24 million; in 2025, $260 million—a 994% increase. But revenue is highly seasonal: NFL season (September-November) contributed $138 million per quarter, with a record $63.5 million in December, while off-season revenue drops significantly.

Polymarket

In contrast, Polymarket took the opposite approach. Until late 2025, it operated at a loss with zero fees, relying on free user acquisition. It was only in February 2026 that they officially introduced Taker Fee dynamic rates in sports markets. In the first week after charging, Polymarket’s fee revenue exceeded $1 million. According to DefiLlama, in the past 30 days, Polymarket earned about $3.18 million, with revenue only starting to trend upward from January this year.

It’s worth noting that daily settlement markets could become future revenue sources for Polymarket. High-frequency, short-cycle markets generate more trades, and users in these markets are less sensitive to fees, similar to meme markets.

Comparison: Kalshi’s fee model is validated but relies on sports seasons; Polymarket’s fee system is just starting, with annual revenue still a fraction of Kalshi’s, but the phase of zero-fee liquidity acquisition is over, and they are now serious about business.

2.3 User Profiles: Licensed Elites vs. Global Retail Traders

The user structures of both platforms are largely shaped by regulatory environments.

Kalshi holds a CFTC license, allowing it to legally serve US users, mainly focusing on the domestic market.

Polymarket, after acquiring QCEX in late 2025, re-entered the US market. Before that, it mainly operated overseas. This “exile period” helped it build a broader international user base.

Revenue structures also reflect user differences.

Kalshi’s revenue is 89% from sports markets. Its user behavior resembles traditional sports betting: high trading frequency, smaller individual bets, seasonal activity spikes during NFL season, with clear seasonality.

Polymarket’s structure is quite different. Political and macro markets dominate, attracting many institutional-level traders hedging macro risks. Bet sizes are significantly larger—for example, during the 2024 US election, a French trader bet over $50 million, ultimately earning $85 million profit. Such volume is rare in sports betting.

2.4 Channel Moats: Distribution Agents vs. Developer Ecosystem

By late 2025, Robinhood and Coinbase had launched prediction market features on their platforms, both partnering with Kalshi. Not just brokerages, but sports platforms like PrizePicks and Underdog also directly directed existing sports betting users to Kalshi. In December, Kalshi formed a Prediction Market Alliance with Coinbase, Robinhood, and Crypto.com.

The logic is straightforward. Kalshi holds a CFTC-approved designated contract market license. For licensed financial institutions, integrating with Kalshi is like connecting to a traditional futures exchange—clear process, low compliance costs, manageable risks.

Polymarket’s approach is entirely different. They didn’t focus on channel distribution but instead built underlying infrastructure, hoping others will develop products around it.

A clear example is the recent acquisition of Dome, a YC Fall 2025 batch project. Dome provides prediction market APIs, allowing developers to write once and access data and liquidity from multiple platforms like Polymarket and Kalshi.

Today, with Vibe Coding popular, developers can directly call Dome’s API to create trading bots, data dashboards, embedded market components. AI agents can also execute prediction strategies automatically via this API.

Looking at both routes together, it’s clear: Kalshi is expanding channels through partnerships to bring in users and volume; Polymarket is building the underlying infrastructure, expecting developers to grow applications on top. One favors business network expansion; the other bets on ecosystem self-formation. Once network effects kick in at the infrastructure level, copying becomes very difficult for later entrants.

2.5 Marketing Strategies: Brand Exposure vs. Community Viral Growth

Their marketing approaches align closely with their user structures.

Kalshi emphasizes brand exposure, using very traditional, direct methods. During the NYC mayoral election, they placed real-time odds ads on Times Square, Penn Station, and subway trains, making prediction probabilities visible on street screens. During the NBA Finals, Kalshi produced a $2,000 TV ad in just two days, aired during prime time, with over 3 million views on X.

Additionally, collaborations with CNN and CNBC allowed Kalshi’s data to appear directly in news broadcasts, serving as an official endorsement that boosts trust.

Polymarket’s approach is quite different, leaning toward community-driven virality.

They designed a detailed referral system: users share their unique links, earning $0.01 per click; if the referred user deposits over $20, the referrer gets a $10 CPA reward. When clicks and transactions reach certain thresholds, additional rewards are distributed, creating ongoing incentives—similar to meme trading platforms’ affiliate links.

Moreover, Polymarket actively cultivates its content ecosystem, supporting accounts like @BrosOnPM, which produce daily content for prediction market builders and traders, helping developers connect traffic and fostering internal circulation.

3. So, Who Is the Ultimate Winner?

The previous data describes the current state of both companies, but the present pattern doesn’t determine the future. Prediction markets are still in early stages, with many variables—regulation, new competitors, unproven business models.

Rather than giving a definitive conclusion, it’s better to identify key questions that will truly decide the outcome.

Both are expanding into each other’s territory

From their actions, both recognize their weaknesses and are working to address them.

Polymarket’s initial US contracts focused on sports, later signing official partnerships with MLS, NHL, and the New York Rangers, endorsing the sports market. A platform that started with politics is now aggressively entering sports.

The author speculates two main reasons:

• Political markets may currently face stricter US regulation, while sports markets are more acceptable.
• To seize Kalshi’s US market share.

Kalshi is also active. They signed deals with CNN and CNBC, integrating odds data into news graphics. Having started in sports, they now aim to establish media-level credibility in politics.

But the risks differ significantly. Polymarket has real trading volume in both politics and sports; Kalshi’s volume is almost entirely in sports. This structural difference will become a thorny issue when discussing regulatory risks later.

Is the biggest channel partner also the most dangerous competitor?

Robinhood is one of Kalshi’s most important retail distribution channels, contributing over half of its trading volume in 2025. Coinbase has launched prediction markets in all 50 US states, clearing through Kalshi.

But both made similar moves:

• Robinhood and Susquehanna formed a joint venture to acquire MIAXdx.
• Coinbase acquired The Clearing Company.

Both are building CFTC-licensed trading infrastructure, expected to go live in 2026. After launch, they can choose to continue sharing revenue with Kalshi or operate independently, leveraging user data, trading habits, and liquidity they’ve accumulated.

For Kalshi, this isn’t just channel risk—it’s a concrete threat with a timeline. Its moat is essentially a first-mover advantage with an expiration date.

Polymarket’s Fees: A Key Step in Validating Business Model

In 2025, Polymarket’s total trading volume exceeded $33.8 billion, but revenue was nearly zero. Yet, a $9 billion valuation requires revenue support—2026 is the year to realize it.

They started testing fees in crypto markets, then expanded to sports markets on February 18, 2026. The logic is clear: both are high-frequency, short-cycle markets with small bets and quick turnover, less sensitive to fees than long-term macro or political contracts. Starting with fees here minimizes impact on core liquidity.

But risks are evident. Prediction market liquidity depends entirely on user-provided liquidity, with no market makers. If professional traders feel fees cut into arbitrage opportunities, they can withdraw instantly.

History shows that exchanges misjudging fee timing and magnitude can see liquidity collapse, leading to a death spiral of declining liquidity and user exit.

Polymarket currently uses maker rebates to hedge this risk, returning part of taker fees to resting orders to maintain order book depth.

Whether they can establish stable revenue without driving away liquidity is crucial for Polymarket’s valuation. The fee experiment has just begun; the full answer will emerge by the end of 2026.

Conclusion: No Kings in War, Only Era Winners

Prediction markets are still young. It’s too early to declare winners and losers. But the outlines of both companies are becoming clearer.

Kalshi’s strengths are obvious: first-mover compliance advantage, mature retail channels, proven revenue model. But it faces significant pressure: high sports revenue dependence, ongoing regulatory uncertainties at the state level, and the looming threat of Robinhood and Coinbase building their own exchanges.

Polymarket’s advantages are also clear: deepest global liquidity, nearly unmatched in political and macro sectors, developing developer ecosystem. But its business model remains unproven—whether its fee mechanisms can truly work out will only be clear by late 2026.

The interesting part of this competition is that their current positions don’t fully overlap. Kalshi is expanding retail reach; Polymarket focuses on information density and market depth. The real showdown will likely occur after Polymarket’s US sports market matures and Kalshi’s political market capabilities improve.

Until then, the industry space remains broad enough for both paths to develop in parallel.