Citizens: Sports prediction markets' 2025 TAM worth $555m
Investment bank says the growing sector is “too loud to ignore”, while Kalshi snaps up former American Gaming Association interim CEO Sara Slane in a key hire
Citizens JMP has described prediction markets as “too loud to ignore” while estimating the vertical has a total addressable market (TAM) worth $555m this year.
In a note penned by analyst Jordan Bender, the $555m figure applies to sports event contracts only, which have come to the fore via Kalshi, Robinhood and Crypto.com.
While there remains growing interest in the vertical for essentially offering sports betting across all 50 states, the analysis claimed the product is still lightyears behind traditional sports betting.
Legalised US sports betting generated around $16bn in 2024, according to Citizens, and the lack of liquidity in the exchange product means it will struggle to reach those heights.
For context, JMP data highlights that the Super Bowl contributes 1% of total US betting handle, while March Madness is accountable for around 2-3%, suggesting that the nation’s largest sporting events only account for less than 10% of total handle.
The firm cited another prediction market platform in Polymarket, noting that its top 10 sporting events racked up a median wagering volume of $277m. Expanding that to its top 100 events and the figure falls to just $4m.
Therefore, Citizens’ estimates would represent a “minor level of cannibalisation” of the traditional sports betting market.
The flash note also explored the possibility of sports event contracts being used by traditional sports betting operators to build up customer databases and recognition in states without legalized sports betting.
Bender’s note highlighted how with Brian Quintenz, a Kalshi board member and former Crypto.com advisor, as the new CFTC chair, the likelihood is that the derivatives regulator will rule that sports event contracts are legal, which in turn could “pave the way” for licensed sportsbooks to launch a similar product of their own.
DraftKings has already informed Citizens that it is “rooting” for such a development.
Meanwhile, Bender notes that Polymarket data suggests VIPs are using prediction platforms more often due to wagering larger sums, much of which is in cryptocurrency and is easier to do so than with a traditional sportsbook operator.
The report concludes by quelling fears that sports event contracts are a “trojan horse” for traditional sports betting, largely due to a less advanced offering, a lack of liquidity outside of major games, though the markets do “have a lower and less costly barrier to entry.”
In other Kalshi news, ex-American Gaming Association (AGA) senior vice-president (SVP) Sara Slane has joined as the firm’s head of corporate development.
Slane’s new position with the company has been confirmed on LinkedIn, where she has pointed out Kalshi’s desire to adhere to all relevant regulations.
“They are a regulatory-focused and compliant-first team: before Kalshi launched a single market, they spent over three years upfront engaging with the CFTC to build the first federally regulated prediction market in the US, all while taking the bitter pill of watching their competitors gain traction by skirting the law or operating offshore,” Slane wrote.
“Kalshi isn’t worried about the short-term. They want to build something enduring. In large part due to their obsession with product experience, I have never seen a company in a stage of explosive growth like Kalshi.
“Within a few months of launching sports, they have already managed to build a frontier product experience, with better pricing, robust risk management and captivating live charts.
“The trading volume, web traffic, attention in the media, and the long list of companies ready to integrate as brokers with Kalshi is staggering.”
Shedding light on what her responsibilities will involve, Slane added: “I’m joining as head of corporate development to help handle some of that integration demand.
“There’s palpable industry excitement about the benefits prediction markets can provide, and I’m thrilled to be working towards a future where all of the operators have prediction markets as part of their product.”
Slane’s industry experience also extends to a previous role as vice-president of regional government affairs at MGM Resorts International, a position she held from January 2007 until December 2013.