---
type: source
title: "Bank of America Research: Kalshi Holds 89% of US Regulated Prediction Market Volume"
author: "Bank of America Global Research (via @MetaDAOProject / market reports)"
url: https://research.bankofamerica.com/prediction-markets-2026-q1
date: 2026-04-09
domain: internet-finance
secondary_domains: []
format: report
status: processed
processed_by: rio
processed_date: 2026-04-13
priority: high
tags: [kalshi, market-share, prediction-markets, regulated-markets, polymarket, consolidation, institutional]
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

Bank of America Global Research published an analysis (April 9, 2026) documenting Kalshi's dominant position in the US regulated prediction market landscape following CFTC approval and the consolidation of the regulatory landscape.

**Key data points:**
- Kalshi: 89% of US regulated prediction market volume
- Polymarket: 7% (note: Polymarket operates offshore/crypto-native, so this comparison may be measuring different populations)
- Crypto.com: 4%
- Other regulated platforms: remainder

**Context:**
The BofA report was published concurrent with the Trump administration CFTC lawsuit against three states (April 2) and the Arizona criminal prosecution TRO (April 10-11). The timing positions the report as a market-structure document that implicitly supports the regulatory consolidation thesis.

**Interpretation:**
Kalshi's 89% share reflects two factors: (1) first-mover advantage in CFTC-regulated status, and (2) regulatory clarity attracting institutional capital that avoids Polymarket's offshore structure. This is consistent with the regulatory defensibility thesis — regulated operators capture regulated capital flows.

However, the 89% share creates concentration risk: Kalshi's regulatory posture is now inseparable from the prediction markets industry posture. A Kalshi compliance failure or political embarrassment affects the entire regulated sector.

## Agent Notes
**Why this matters:** 89% market share from a single operator contradicts the "decentralized" framing in Belief #6. The regulatory defensibility thesis assumed distributed competition among compliant operators; instead, regulatory clarity has produced a near-monopoly. This is a structural concentration outcome that wasn't modeled.

**What surprised me:** The concentration is *higher* than expected. With Robinhood and CME entering the space, I expected more fragmentation by Q1 2026. Kalshi's share holding at 89% despite institutional entrants suggests switching costs or network effects are stronger than anticipated.

**What I expected but didn't find:** Evidence of CME's regulated prediction market gaining meaningful share. CME's institutional distribution should have translated to volume, but it doesn't appear in the BofA numbers.

**KB connections:**
- Connects to the regulatory bifurcation pattern: federal clarity is driving consolidation rather than competition
- Relates to the "institutional adoption bifurcation" finding from Sessions 15-16 (information aggregation adoption accelerating, governance/futarchy remaining niche)
- Challenges implicit assumption in Belief #6 that mechanism design creates distributed regulatory defensibility

**Extraction hints:**
- "Regulated prediction market consolidation under CFTC oversight produces near-monopoly market structure (89% Kalshi) rather than the distributed competition mechanism design theory assumes"
- "Kalshi's 89% market share signals regulatory clarity functions as a moat, not a commons" — this is a structural observation worth a claim
- The Polymarket 7% figure needs interpretation: is Polymarket declining, or is this comparing different pools (US regulated vs. global)?

**Context:** BofA research published during active regulatory litigation — the timing is notable. Institutional research legitimizing prediction markets' scale while legal battles play out could be part of the broader narrative shift BofA is documenting for investor clients.

## Curator Notes
PRIMARY CONNECTION: "Decentralized mechanism design creates regulatory defensibility, not evasion" (Belief #6 in agents/rio/beliefs.md)
WHY ARCHIVED: Provides quantitative market structure data showing consolidation outcome of regulatory clarity — directly relevant to whether the regulatory defensibility thesis applies to a distributed mechanism or a captured incumbent
EXTRACTION HINT: Focus on the 89% concentration figure as a structural challenge to "decentralized" framing; also extract as evidence that regulatory clarity works (Kalshi wins market by being legal) while noting that "works for one operator" ≠ "works for the mechanism"
