How did a market once dominated by crypto-native exchanges see a rapid U.S.-regulated contender take the lead? Observers point to a convergence of regulatory positioning, product design, and changing customer mix that allowed Kalshi to close ground quickly on incumbent Polymarket. By mid-September 2025 Kalshi reported weekly trading volume north of $500 million, eclipsing Polymarket’s roughly $430 million, and sustaining parity after a late August crossover. That inflection reflected both faster turnover — Kalshi’s average open interest near $189 million versus Polymarket’s $164 million — and a user base increasingly oriented toward shorter-duration trades and immediate liquidity. The monthly figures amplify the trend: Kalshi recorded about $1.3 billion in September 2025 against Polymarket’s $773 million, and combined monthly volumes for the two platforms approached $4.5 billion amid heightened institutional participation. Market share metrics corroborate the shift; Kalshi captured approximately 62% of global prediction market volume by September, up sharply from single-digit levels a year earlier, while Polymarket held roughly 37%. These proportions underscore how U.S. regulation and mainstream trust can reallocate activity in a space long associated with decentralized finance. Regulatory and geographic factors have been decisive. Kalshi’s status as a U.S.-regulated exchange, supported by prominent investors, created a compliant on-ramp attractive to retail and institutional participants constrained by regulatory concerns. Polymarket’s blockchain-native model, operating on Polygon Layer 2, preserved decentralization and transparency but faced delays re-entering regulated U.S. markets despite acquiring QCX. Those delays constrained direct U.S. access and contributed to temporary volume headwinds. Both platforms rely on smart contracts to automate trade execution and payouts, enhancing operational efficiency. Technological strategies reveal an arms race in integration. Kalshi has begun accepting about 10% of deposits in crypto, enabling Solana wallet funding while converting flows to fiat for execution, signaling pragmatic crypto integration. Polymarket continues to lean into on-chain primitives and reportedly plans tokenization or a stablecoin to deepen its ecosystem. Each approach carries trade-offs: Kalshi prioritizes regulated liquidity and velocity, Polymarket emphasizes decentralization and long-duration markets that sometimes lock capital. Analysts view the contest as unresolved, with crypto, AI, and real-world events likely to reshape market structure further. Adding to the competitive backdrop, regulators in Massachusetts have highlighted concerns over sports wagering activity, noting more than $1 billion in sports-related wagers during the first half of 2025. The industry’s trajectory was also influenced by regulatory milestones that gave Kalshi a sustained compliance advantage.
