Prediction markets just got a fresh sell-side stamp of legitimacy. In a new report, Bernstein calls them a viable asset class — arguing that what once looked like novelty bets are now being built into the foundations of mainstream finance, backed by real capital, real users and regulatory approval.
The report pushes back on skepticism that prediction markets are too niche to scale. In the US, Bernstein argues, the landscape looks different: regulation is loosening, and platforms are moving closer to the mainstream through major partnerships and retail integrations.
Robinhood Markets Inc., for instance, clocked around $2.3 billion in prediction-markets volume for the third quarter and $2.5 billion in in October alone, roughly equivalent to $300 million in annual revenue run rate for the online brokerage, according to the analysts. Meanwhile, Coinbase Global Inc. has announced plans to launch prediction markets as part of its “Everything Exchange” vision, encompassing crypto, tokenized equities, stablecoins and prediction markets. Ahead, the Bernstein analysts expect the largest cryptocurrency exchange in the US to announce prediction markets as a key product by the end of the year.
Bernstein also highlights Kalshi and Polymarket as central players in the shift, each helping move prediction markets from the margins into more regulated and accessible territory.
“By letting markets decide probabilities for key events, more mainstream investors can factor these information signals in their portfolios,” wrote Bernstein analysts including Gautam Chhugani. “Increasing political polarity in media and the growing AI slop in content has further blurred signal from noise.”
The analysts see prediction markets emerging as a potential growth driver for Robinhood and Coinbase, citing their large active-trader bases and deep platform liquidity. Bernstein rates both stocks outperform with price targets of $160 for Robinhood and $510 for Coinbase — implying upside of roughly 24% and 70%, respectively, from Thursday’s prices.
Other firms are also building out their prediction-market offerings. Interactive Brokers Group Inc. launched its own prediction market, ForecastEx, in November 2024 thanks to the “enormous” growth potential of the space. Even Donald Trump’s social-media company is pushing into the area, with plans to launch Truth Predict “in the near future.”
Traders are already betting on market events including inflation prints and Federal Reserve rate cuts, using simple contracts that let them trade on clear yes-or-no outcomes. But it’s not just access that’s shifting — Bernstein argues the market forces are, too. These aren’t fringe bets anymore; they’re fast becoming financial infrastructure, tradable signals that could sit alongside options or ETFs as ways to express macro views.
To be sure, volumes remain modest and the vast majority of bets tend to be sports-related. The industry is nascent and some of its key players have histories with legal and regulatory issues.
But while liquidity remains thin and political contracts are still a regulatory minefield, the core infrastructure is now in place, according to Bernstein, as the total addressable market beyond state-regulated betting platforms continues to expand. At the same time, the Trump administration’s digital-asset push is helping crypto markets supply deep global liquidity to the platforms.
