In this photo illustration, an online prediction market site’s app is displayed on an electronic device on February 25, 2026 in Chicago, Illinois.
Scott Olson | Getty Images
Prediction markets are becoming “retail’s shiny new toy,” Barclays analysts said, noting their popularity has soared compared to other speculative investments.
Analysts said in a report Tuesday that the predictive platform’s monthly notional trading volume has skyrocketed since the 2024 presidential election and exploded last fall.
They said prediction markets are a close competitor to leveraged exchange traded products. Leveraged trading products are high-risk investments that use bonds or derivatives to multiply returns based on the daily performance of a particular asset.
As of this year, monthly notional trading volume in prediction markets is well behind leveraged exchange-traded products and comparable to index and single-stock call overwrite strategies, which generally generate returns using short calls.
Analysts say individual participation in derivatives markets has increased in recent years. These investors represent the majority of participants in S&P 500 zero-day to expiry options (0DTE options) and account for more than half of the total trading volume of S&P options.
Speculative impulses often drive retail participants into previously uncharted territory. Five years ago, retail investors fueled a meteoric rise in meme stocks. game stop He gave cryptocurrencies a speculative name such as , and pushed them into the mainstream. The volume of 0DTE options also increased in early 2023. CBOE Global Market I started the option with S&P500 index.
Jeff Kilberg, founder, CEO and CIO of specialty wealth management firm KKM Financial, said prediction markets are gaining traction right now because they’re more accessible, citing the platform’s binary outcomes and “broader diversity” in the events it trades as examples of why it’s more accessible.
“It’s a completely different animal,” he said.
The combined notional value of leading prediction market platforms Kalshi and Polymarket reached more than $24 billion as of April, up from less than $5 billion a year ago, according to data from Dune Analytics.
Barclays analysts noted that the majority of deal value focuses on non-financial outcomes, with sports contracts topping both the Calci and Polymarket markets.
Still, despite this rapid growth, prediction markets have been unable to compete with leading retail products such as S&P’s ODTE options, Barclays analysts said. The S&P 0DTE market’s total trading volume in March reached nearly $57 trillion.
Kilberg doesn’t think the AI bubble is driving increased interest in prediction markets. Rather, he suggests that prediction markets have reached this milestone because of their viral appeal among younger generations.
A Northwestern Mutual study conducted earlier this year found that nearly one-third of Gen Z and nearly one-quarter of Millennials are currently putting money into prediction markets or sports betting or are considering participating in these activities.
Mr Kilberg said prediction markets could be a “bridge” to stock market trading. He hopes traders can use this as a start to understand the “very accessible” platform before jumping into high-risk zero-day options.
“It excites me,” he said. “The more people there are in the market, the better. There is no age discrimination in the beauty of the market.”
Disclosure: CNBC and Kalsi have a commercial relationship that includes customer acquisition and minority ownership.
