---
type: claim
domain: internet-finance
secondary_domains: [mechanisms, grand-strategy]
description: "Prediction markets grew from $15.8B to $63.5B annual volume (2024-2025) and are on a $200B+ run rate in 2026, building liquidity infrastructure and regulatory precedent that decision markets could inherit — but no evidence exists that this conversion is occurring"
confidence: likely
source: "Messari (@0xWeiler valuation thread, Mar 2026), CertiK 2025 report, Pine Analytics MetaDAO Q4 2025 report, Robin Hanson (Overcoming Bias 2025)"
created: 2026-03-26
related:
- Augur
- prediction-market-regulatory-legitimacy-creates-both-opportunity-and-existential-risk-for-decision-markets
- prediction-markets-are-spectator-sports-while-decision-markets-require-skin-in-the-game-creating-fundamentally-different-cold-start-dynamics
reweave_edges:
- Augur|related|2026-04-17
- prediction-market-regulatory-legitimacy-creates-both-opportunity-and-existential-risk-for-decision-markets|related|2026-04-19
- prediction-markets-are-spectator-sports-while-decision-markets-require-skin-in-the-game-creating-fundamentally-different-cold-start-dynamics|related|2026-04-19
sourced_from:
- inbox/archive/internet-finance/2026-03-15-pineanalytics-p2p-metadao-ico-analysis.md
- inbox/archive/internet-finance/2026-03-25-pine-analytics-p2p-me-ico-analysis.md
---

# Prediction market growth builds infrastructure for decision markets but the conversion is not happening

Prediction markets exploded from $15.8B (2024) to $63.5B (2025) in annual trading volume, with February 2026 alone processing $23.2B combined across Polymarket and Kalshi — a 1,218% year-over-year increase. The annualized run rate now exceeds $200B, surpassing total US sportsbook volume ($166.9B in 2025). Kalshi raised at a $22B valuation on $263.5M in 2025 fees (83.5x multiple). Polymarket is seeking $20B with a confirmed $POLY token.

Despite sharing the same conditional market mechanics, the decision market space remains tiny. MetaDAO — the leading futarchy implementation — has $219M total ecosystem marketcap and generated $2.51M in Q4 2025 fee revenue. The scale gap between prediction and decision markets has widened from ~100x (January 2026 estimate) to ~1,000x by volume.

The infrastructure argument — that prediction markets build liquidity, train traders, establish regulatory precedent, and create tooling that decision markets can inherit — is theoretically sound but empirically unsubstantiated. No major prediction market platform has expanded into governance applications. No significant trader migration from Polymarket/Kalshi to MetaDAO futarchy markets has been documented. The applications driving prediction market growth (sports betting, political wagering, fast-resolving crypto up/down markets) are categorically different from governance decisions.

Robin Hanson explicitly identifies this gap: he views current prediction markets as "necessary but insufficient precursors" and worries that regulatory backlash against sports/entertainment uses could "shut down the more promising markets that I've envisioned" as collateral damage. The regulatory risk is real — CFTC Chairman Selig withdrew proposed bans on political/sports contracts in late 2025, but the regulatory window could close.

Three structural barriers prevent conversion:

1. **Incentive mismatch** — Prediction market traders optimize for profit on event resolution. Decision market participants must hold governance tokens and care about organizational outcomes. The trader populations barely overlap.

2. **Resolution clarity** — Prediction markets resolve unambiguously (who won?). Decision markets require defining success metrics (did this proposal increase token price?), introducing measurement complexity and longer time horizons that reduce trader participation.

3. **Market size ceiling** — Prediction markets are consumer products with global addressable markets (anyone can bet on the Super Bowl). Decision markets are organizational infrastructure embedded in specific DAOs, limiting participants to stakeholders with governance exposure.

## Evidence

- Prediction market annual volume: $15.8B (2024) → $63.5B (2025) → $200B+ annualized run rate (Feb 2026)
- February 2026 combined volume: $23.2B (up 1,218% YoY)
- Polymarket February 2026: $7.9B (note: Paradigm found volume double-counted on dashboards due to NegRisk structure — real figure may be ~$4B)
- Kalshi $22B valuation on $263.5M in 2025 fees (83.5x multiple, March 2026)
- Kalshi March Madness week: $3.4B volume, $33.1M fees, $25.5M in 4-day stretch
- MetaDAO Q4 2025: $2.51M fee revenue, $3.6M proposal volume, $219M ecosystem marketcap (Pine Analytics)
- MetaDAO daily revenue as of March 9, 2026: ~$4,825/day
- CertiK: 3 platforms control 95%+ of global prediction market volume; wash trading peaked near 60% on Polymarket in 2024
- Hanson: "Prediction Markets Now" (Dec 2025) — views current markets as early, worries about regulatory collateral damage

---

### Additional Evidence (confirm)
*Source: [[2026-03-26-tg-source-m3taversal-jussy-world-thread-on-polymarket-projected-revenu]] | Added: 2026-03-26*

Polymarket's projected revenue jump from $4.26M to $172M/month demonstrates massive prediction market scaling, but this growth is in sports betting and political forecasting verticals, not governance applications. The infrastructure exists at scale but decision market adoption remains minimal.


Relevant Notes:
- [[prediction-market-scale-exceeds-decision-market-scale-by-two-orders-of-magnitude-showing-pure-forecasting-dominates-governance-applications]] — this claim updates and extends with 2026 data; gap is now ~1000x not ~100x
- [[Polymarket vindicated prediction markets over polling in 2024 US election]] — the validation event that catalyzed growth
- [[polymarket-kalshi-duopoly-emerging-as-dominant-us-prediction-market-structure-with-complementary-regulatory-models]] — duopoly now at ~$42B combined valuation
- [[polymarket-achieved-us-regulatory-legitimacy-through-qcx-acquisition-establishing-prediction-markets-as-cftc-regulated-derivatives]] — regulatory legitimacy enables growth
- [[MetaDAOs futarchy implementation shows limited trading volume in uncontested decisions]] — decision market liquidity challenge
- [[futarchy adoption faces friction from token price psychology proposal complexity and liquidity requirements]] — adoption friction persists despite prediction market normalization
- [[speculative markets aggregate information through incentive and selection effects not wisdom of crowds]] — the mechanism works at scale for prediction; question is whether it transfers to governance

Topics:
- domains/internet-finance/_map
- core/mechanisms/_map