History of Prediction Markets [2026]

Prediction markets are not a recent invention. Informal betting on political and social outcomes has existed for centuries. Late 1800s Wall Street curb markets bet heavily on US presidential elections, with election betting volumes that some historians estimate exceeded the underlying stock market on election years. Newspaper coverage of betting odds was a normal part of election commentary into the early 20th century.

Election betting on Wall Street faded after the 1930s, partly due to legal restrictions and partly due to changing social norms around political prediction. Sports betting moved from informal markets into regulated sportsbook structures over the same period. The combination meant that organised prediction markets essentially disappeared as a public feature of American economic life for several decades.

Academic interest in prediction markets revived in the 1980s as economists studied information aggregation through prices. Researchers including Charles Plott and Robin Hanson studied prediction markets as both economic systems and forecasting tools. The academic foundation laid in the 1980s and 1990s shaped the modern prediction market industry that emerged in the 2000s.

For broader background on how prediction markets work see our what are prediction markets guide.

The Iowa Electronic Markets are the oldest continuous online prediction market platform. Run by the University of Iowa Tippie College of Business since 1988, the markets operate as an academic research project under a special CFTC no-action letter that exempts them from full DCM registration.

The platform's primary markets cover US presidential and congressional elections, with smaller markets on other event types. Trading limits are capped (typically $500 per trader per market) to keep the platform academic rather than commercial. The Iowa Electronic Markets have continuously operated since 1988, making them the longest-running online prediction market in the world.

The Iowa markets produced the foundational academic research showing that prediction markets often outperform polls on US presidential elections. Across multiple election cycles, Iowa Electronic Markets prices proved more accurate than aggregate polling averages, particularly in the final weeks before each election. The research published from these markets shaped the academic understanding of information aggregation through markets.

The Iowa Electronic Markets are still active in 2026 as a research platform. The trading limits and academic structure mean they are not a primary venue for retail prediction trading, but the platform remains a reference point for understanding the prediction market category and produces continuing academic research on market accuracy.

Intrade was the first major commercial prediction market platform. Launched in Ireland in 2001 (as TradeSports initially, rebranded to Intrade), the platform offered binary contracts on a wide range of events including US elections, Federal Reserve decisions, sports outcomes, and entertainment events. At its peak in the late 2000s, Intrade was the dominant prediction market platform globally.

Intrade operated successfully for over a decade, generating significant trading volume on flagship events including the 2008 and 2012 US presidential elections. The platform's prices on the 2008 election were widely cited in mainstream media coverage and produced a forecasting track record that compared favorably to traditional polling.

Intrade collapsed in 2013 amid regulatory and operational challenges. The CFTC sued Intrade in November 2012 alleging it operated unregistered options markets accessible to US users. Following the lawsuit, Intrade restricted US users and faced subsequent operational difficulties that culminated in the platform shutting down in March 2013. The collapse was a major setback for the commercial prediction market category.

The lessons from Intrade shaped the modern era. Future commercial prediction markets needed to navigate the CFTC framework explicitly rather than operating in the regulatory grey zone Intrade occupied. Kalshi's eventual approval as a CFTC Designated Contract Market in 2020 was the practical resolution of the regulatory questions Intrade had run into a decade earlier.

Betfair launched in 2000 as a peer-to-peer sports betting exchange in the UK. The platform allowed users to back and lay bets against each other rather than betting against a sportsbook house. Betfair's exchange model produced tighter pricing than traditional sportsbooks because the platform did not embed the same vig structure into its odds.

Betfair grew rapidly through the 2000s to become one of the largest online betting operators in the world. The exchange model proved popular with active sports bettors who valued tighter pricing and the ability to lay bets (effectively shorting outcomes). Betfair's success demonstrated that peer-to-peer betting structures could attract significant retail volume.

While Betfair is primarily a sports betting platform rather than a general prediction market, the exchange model directly inspired modern prediction market platforms. Polymarket's order book matching, Novig's zero-vig peer-to-peer model, and Kalshi's central limit order book all draw on the conceptual framework Betfair pioneered. The peer-to-peer matching model is now standard across the prediction market category.

Betfair continues to operate in 2026 as a sports-focused exchange with global reach. The company merged with Paddy Power in 2016 to form Flutter Entertainment, which now operates one of the largest online betting portfolios globally. Sports prediction in 2026 still draws conceptual lineage from Betfair's exchange-first approach.

Polymarket launched in 2020 as a decentralised prediction market platform on the Polygon blockchain. The platform's smart contract architecture combined with USDC trading currency and UMA Protocol resolution produced the first major decentralised prediction market that achieved meaningful liquidity.

Polymarket grew rapidly through the 2020 US presidential election cycle, attracting tens of millions of dollars in cumulative volume by the end of 2020. The 2024 cycle was a defining moment: Polymarket's presidential market attracted hundreds of millions of dollars in open interest and produced prices that beat aggregate polling consensus in the final weeks. Total cumulative volume passed $3 billion in 2024.

Polymarket's regulatory journey has been complex. The platform settled with the CFTC in January 2022 over allegations it operated unregistered binary options markets. The settlement included a $1.4 million fine and an agreement to block US users. Polymarket continues to operate as a decentralised platform internationally and remains the deepest-liquidity prediction market in the world for non-US users.

The decentralised structure that Polymarket pioneered influenced subsequent platforms across the category. Augur, Manifold Markets, and other decentralised prediction protocols all draw on the technical foundation Polymarket established. The combination of decentralised infrastructure with polished user experience has become the template for serious crypto prediction market design.

Kalshi was founded in 2018 with the explicit goal of bringing prediction markets into US regulatory compliance. The company spent years engaging with the CFTC on the regulatory framework before achieving full Designated Contract Market status in 2020. This made Kalshi the first CFTC-approved prediction market in the US.

Kalshi launched its trading platform shortly after CFTC approval and grew steadily through 2021-2023. The platform's regulated structure attracted US institutional and retail traders who could not access Polymarket due to its US block. Coverage focused on economic indicators, weather contracts, and sports markets that fell within the CFTC framework.

The 2024 federal court ruling was the defining moment for Kalshi. The CFTC initially objected to Kalshi listing election event contracts on the grounds they were too similar to gambling on elections. Kalshi sued the CFTC in 2023. The federal court ruled in Kalshi's favour in summer 2024, allowing election prediction markets to list under CFTC oversight. The ruling locked in the regulatory foundation for the entire US prediction market industry.

Robinhood Derivatives received CFTC DCM approval in 2025, allowing the launch of Robinhood Predict inside the standard Robinhood mobile app. This was the second major regulated US prediction market platform and brought event contract trading to Robinhood's 23 million-user base. The combination of Kalshi and Robinhood Predict positioned the regulated US category for substantial growth heading into 2028.

The regulatory timeline for prediction markets in the US covers multiple decades and key milestones. Understanding the timeline helps explain how the modern regulated category came together.

1988: The Iowa Electronic Markets launch under a CFTC no-action letter that permits academic research markets. This is the first formal recognition of prediction markets in US regulatory practice.

2001-2013: Intrade operates as the dominant commercial prediction market without full CFTC approval. The platform faces growing regulatory scrutiny that culminates in the 2012 CFTC lawsuit and Intrade's 2013 shutdown.

2018: Kalshi is founded with the goal of operating as a fully CFTC-regulated prediction market platform. The company begins multi-year regulatory engagement with the CFTC.

2020: Kalshi receives CFTC Designated Contract Market approval, becoming the first regulated US prediction market platform.

January 2022: Polymarket settles with the CFTC, paying a $1.4 million fine and agreeing to block US users.

2023: Kalshi sues the CFTC over the agency's objection to Kalshi listing election event contracts.

Summer 2024: A federal court rules in Kalshi's favour, confirming election prediction markets are legal under CFTC oversight. The ruling locks in the regulatory foundation for the regulated US prediction market industry.

2025: Robinhood Derivatives receives CFTC DCM approval. Robinhood Predict launches inside the Robinhood mobile app.

For our coverage of the current legal status see our are prediction markets legal US guide.