Prediction Markets: Why Operators Need a Third Vertical

New products are often placed beside familiar ones to make adoption easier. Prediction markets, however, can attract users with different habits and expectations from conventional sportsbook customers. Treating the format only as a sportsbook feature may therefore limit how clearly it is positioned and measured.

Combined monthly volume across leading prediction market platforms rose from about $32 million in January 2024 to $12.6 billion in January 2026, according to a SOFTSWISS industry report. Major gaming and consumer platforms also moved into the category during 2025. This growth raises a strategic question: should prediction markets remain a tab inside the sportsbook, or operate as a distinct vertical with their own customer journey?

From Emerging Format to Commercial Category

Prediction markets were a relatively small niche until recently. The sharp increase in trading volume and the entry of established gaming brands suggest that the category is becoming commercially significant.

This changes how operators can approach the product. A feature inside a sportsbook may receive limited development and marketing resources. A separate vertical can have its own targets, product roadmap, and acquisition strategy, giving teams more room to test demand and understand which audiences respond to the format.

Early participation can also provide useful product data. Operators can test event categories, interface choices, and user behaviour before the market becomes more mature. The commercial outcome will still depend on execution, regulation, acquisition costs, and competition.

Why the Sportsbook Frame Can Be Limiting

Classification influences product priorities before the first screen is designed. When prediction markets sit deep inside a sportsbook, development and promotion may follow the sportsbook calendar. That can make it harder to test use cases beyond sport or build a distinct proposition.

A Third Vertical in the Product Portfolio

Casino and sports betting already serve established patterns of play. Prediction markets use a different event-contract structure and can cover subjects beyond sport. Giving the category separate status can make those differences clearer across product, marketing, and reporting.

Separate tracking can also help management assess the product on suitable terms. Sportsbook turnover alone may not show whether prediction markets are reaching incremental users, generating repeat activity, or creating demand around non-sport events.

A Different Commercial Purpose

A prediction market can reach people who have little interest in conventional sportsbook odds but follow politics, economics, culture, technology, or other public events. That potential audience is one reason to evaluate the format separately rather than assume it serves the same users as sports betting.

The value may extend beyond the first transaction. Where regulation and user consent allow it, operators can analyse whether prediction-market users also show interest in casino or sportsbook products. Cross-sell should remain relevant to the user rather than being treated as an automatic outcome.

An Independent Commercial Direction

A small widget can be quick to add, but a narrow placement gives the format less room to develop its own acquisition and retention strategy. A standalone proposition can support dedicated campaigns, onboarding, and product measurement.

Separate reporting can also make commercial performance easier to evaluate. Managers can examine acquisition cost, repeat use, and customer value without mixing all activity into sportsbook reporting. Whether the vertical becomes commercially meaningful will depend on actual user behaviour and operating costs.

Prediction Markets’ iGaming Audience

One of the main strategic questions is whether prediction markets can reach people outside the usual betting base. Their expectations can influence terminology, onboarding, event selection, and interface design.

Users With a Trading Mindset

Contracts, positions, and market prices are common terms in prediction markets. This framing may appeal to users who already follow public events through probabilities or are familiar with trading-style interfaces.

A conventional sportsbook identity may therefore feel less natural to some of these users. A separate destination can use terminology that better matches the product while still explaining the mechanics clearly to newcomers.

Newcomers to Event-Based Markets

A yes-or-no contract can be easier to understand than a sportsbook screen with many bet types and odds formats. A user can read the event question, review the contract terms, and understand the possible outcomes without learning the full structure of sports betting.

This simplicity may also support casual users who follow politics, entertainment, economics, or other event categories. Clear onboarding remains important because prediction markets still involve financial risk and settlement rules that users need to understand.

Casino Players Seeking a Clear Entry Point

Binary outcomes can provide a relatively simple introduction to event-based products for existing casino customers. Familiar account access may reduce friction, while the new format still requires a clear explanation of pricing, settlement, and risk.

This can broaden the range of products within an operator’s ecosystem, but placement matters. A generic sports tab may not communicate that prediction markets can cover subjects well beyond sport.

Designing a Simpler Experience

Traditional sportsbook interfaces can present hundreds of markets and several odds formats. Experienced bettors may value that depth, while a newcomer may find the same screen difficult to navigate.

A dedicated UI can prioritise:

• yes-or-no decisions;
• plain event wording;
• short onboarding paths;
• limited choice overload;
• consistent terminology;
• mobile-first interaction.

These choices can shorten the path from interest to understanding. The same basic interaction can also work across sport, politics, economics, culture, and other permitted event categories.

Clear settlement rules are equally important. Users should be able to understand when a market closes, how the outcome is determined, and what happens after settlement. This supports transparency regardless of how simple the front end appears.

The Commercial Cost of Waiting

Independent prediction platforms are already building direct user relationships and behavioural data. During the 2026 FIFA World Cup, Reuters reported that Kalshi recorded $27 billion in trading volume and about 3 million users over the tournament. The figures show the scale that a major event can generate, although one tournament should not be treated as a forecast for future performance.

The main areas operators may miss include:

1. Audience ownership. Standalone services build direct relationships with users who may not visit a conventional sportsbook.
2. First-party data. Activity can show which event categories attract attention and how often users return.
3. Commercial participation. Large volumes that remain on external platforms do not contribute to the operator’s own product activity.
4. Product learning. Earlier entrants have more time to test market selection, pricing, presentation, and onboarding.

Waiting may reduce near-term implementation risk, but it can also leave established platforms more time to strengthen user habits. The impact will vary by market, especially because the regulatory treatment of prediction markets remains contested in several jurisdictions.

Brand architecture is one practical choice. Fanatics introduced a separate app for its prediction market in December 2025, while PrizePicks added event contracts within its existing product in November 2025. These examples show that treating prediction markets as a distinct product category does not require the same interface strategy for every operator.

An operator can keep the vertical within a wider platform while preserving distinct positioning. Trading-oriented terminology may suit experienced users, while plain event wording can make the product easier to understand for newcomers.

Internal ownership matters as well. A dedicated product lead can coordinate technology, compliance, UX, and commercial planning. Without clear responsibility, prediction-market development may compete with established sportsbook priorities.

Fixed-Price or Exchange-Based Models

Once the category has a clear place in the portfolio, the operating model becomes the next question.

Two broad approaches create different requirements:

1. In a fixed-price or fixed-odds-style setup, the operator or its supplier determines the available price and manages the associated exposure. This can be easier to connect with existing sportsbook-style risk and trading processes, depending on the product and jurisdiction.
2. In an exchange-based model, participants trade event contracts through a market where prices respond to supply and demand. This requires suitable market infrastructure and sufficient liquidity, and the regulatory framework can differ from conventional sportsbook operations.

The appropriate model depends on the target market, regulatory structure, audience, liquidity strategy, and technical capacity. Operators should define the commercial and compliance role of the category before choosing its architecture.

The Main Things about Prediction Markets

Recent growth has moved prediction markets from a niche topic into a category that iGaming operators increasingly need to evaluate. Their potential value lies partly in audiences and event types that do not fit neatly inside conventional sports betting.

Key points for operators:

• Recent volume growth suggests that prediction markets have reached a scale that merits separate product evaluation.
• A distinct proposition may appeal to trading-oriented users as well as people who prefer simple event questions.
• Binary contracts can reduce interface complexity, but pricing, risk, and settlement still need clear explanation.
• Standalone prediction platforms are already building direct customer relationships and first-party data.
• Fixed-price and exchange-based approaches create different technical, liquidity, risk, and regulatory requirements.