From niche to escape velocity
Prediction markets look niche until you remember what they really are, a consumer marketplace with financial rails. The same thing happens again and again in marketplaces that start as a curiosity, a small group of power users create the first liquidity, that liquidity makes the product genuinely useful, and usefulness becomes the distribution.
Kalshi is a clean case study because the growth loop is visible. More participants tighten spreads and improve fills. Better markets pull in more participants. Then a second loop kicks in once distribution channels mature. Broker integrations reduce friction, lend trust, and place the product where people already have money and habits. That combination compresses the time it takes to reach escape velocity.
The point for operators is that this is not a story about one clever feature. It is about the moment an industry discovers which inputs actually move the flywheel, inventory depth, liquidity density, and distribution leverage. Kalshi has leaned into all three at once, expanding markets from roughly 100 to about 1,500, chasing more market structures, and meeting what it described as an influx of broker integration demand.
If you are building anything two sided, you should recognise the pattern. You do not win by shouting louder. You win by making the marketplace itself more legible and more liquid, then letting that improved experience do your marketing for you.
The numbers that matter for a marketplace
A lot of startup metrics are easy to spoof. Marketplace metrics are harder because they show whether the thing is actually working. Kalshi has a set of numbers that, taken together, point to real thickening rather than surface level hype.
Funding is the obvious headline, but the sequencing matters. Kalshi raised a $185M Series C at a $2B valuation led by Paradigm and Sequoia, followed by a $300M Series D at a $5B valuation, then a $1B round in November 2025 at an $11B valuation. Total funding is cited at $1.71B as of 2025. You do not get that kind of capital formation unless the market believes liquidity and distribution are compounding.
Operational traction backs it up. Revenue was $24M in 2024, up from $1.8M in 2023, a 1,220% to 1,221% year on year increase depending on rounding. Trading volume reached $1.97B in 2024 versus $183M in 2023. That is the difference between an experiment and a market people actually use.
Even the relative growth rates tell you something. Recent reports described the user base up about 50x while market volume grew about 100x over roughly the last year. Volume outpacing users is what you want to see in a mature marketplace, it suggests returning behaviour, larger average position sizes, and better matching. In plain language, the product is becoming more habit forming and more liquid at the same time.
If you run growth, anchor on the ratios. Users matter. Volume per user and repeat volume matter more.
Inventory is distribution in disguise
Kalshi expanding from roughly 100 markets in October to around 1,500 markets today is not just a product roadmap. It is a distribution strategy wearing product clothing. More markets create more reasons to arrive, more reasons to return, and more hooks that travel naturally through the internet.
Every market is a potential landing page. When you list outcomes people already search for, election results, rate decisions, weather events, sports series, you increase the surface area for organic acquisition. This is the marketplace equivalent of e-commerce SKU expansion. You are not only giving existing users more to do, you are manufacturing more entry points for new users.
It also changes sharing behaviour. A generic "prediction markets" pitch is abstract. A specific market is concrete. People do not forward abstractions. They forward something culturally legible that they can argue about in a group chat. That shareability is compounded by timeliness. When there is always something new, a platform can feel like a live feed rather than a static app.
Kalshi has talked about targeting another 2x to 3x increase in market count by year end. That pace matters because inventory is not neutral. It is a growth lever that can be measured, number of new markets per week, percentage of new markets that generate meaningful open interest, and time to first trade after listing.
If you are applying this elsewhere, do not treat catalogue depth as a nice to have. Treat it as an acquisition channel you can ship.
Broker integrations compress the growth timeline
Most consumer fintech growth is a slow grind. You have to earn trust, get money in, teach new behaviour, and overcome the feeling that "this is yet another app". Broker integrations are one of the few distribution moves that can bypass much of that.
Kalshi has described an incredible influx of broker demand for integrations. The implication is simple. If a prediction market becomes a tile inside a brokerage someone already uses, acquisition is no longer a standalone marketing problem. It becomes embedded distribution.
There are three practical mechanics here. First, trust transfer. Users are more willing to trade a new instrument inside an environment they already believe is compliant and safe. Second, reduced funding friction. A separate KYC flow and separate wallet are conversion killers. Third, habitual context. People check their brokerage for prices and positions. A prediction market sitting next to ETFs and options benefits from that existing habit loop.
We have already seen broker partnerships mentioned in the space, including Robinhood in March 2025 and Webull for event futures. You can view these integrations as the equivalent of app store featuring, but with much higher intent. A user who is already in a brokerage is already in a money mood.
For growth teams, the playbook is to design your product so it can survive as an embedded feature. That means clean APIs, clear contract specifications, predictable settlement, and the kind of user interface that makes sense when you are not the only product on the screen.
Paid media scales awareness. Integrations scale distribution. In marketplaces, distribution wins faster.
Liquidity is the product and the marketing
In prediction markets, liquidity is not a back office metric. It is what users experience as quality. Tight spreads, reliable fills, and confidence that a price actually means something. When Kalshi reports volume scaling faster than users, and when broader data points show $1.97B in 2024 volume, you are looking at a liquidity story.
There is a reason liquidity creates its own marketing loop. People cite the market price as a reference point in conversation. That turns the platform into a source. If the price is credible, it travels. If the price is thin and jumpy, it does not. The growth lever is not "go viral". It is "make the price worth quoting".
The operational mechanism is familiar from other two sided markets. More participants create more matching opportunities. That improves execution quality. Better execution pulls in more participants, including more sophisticated ones, which further deepens the market. Over time you see clustering where the best prices become the default. Once a platform owns the reference price for a headline event, competitors have a hard time catching up.
Kalshi has also reported trading volume growing sixfold over the last six months as of November 2025, and an annualised net revenue pace of $600M to $700M. Even allowing for the messiness of fast scaling marketplaces, that shape is what a working flywheel looks like.
If you are building a marketplace, treat liquidity as a customer facing feature. Put it on dashboards. Build incentives around it. Make your marketing tell the truth, which is that a better market is a better product.
Sports changed the demand curve
Sports is where prediction markets stopped being an intellectual curiosity and started behaving like a mass market product. The numbers are hard to ignore. Data points cited include $2B in sports trading in H1 2025, $513M from March Madness, $453M from the NBA Playoffs, and sports accounting for about 75% of activity with open interest in sports contracts regularly above $100M.
This matters for growth because sports has three ingredients that make flywheels spin faster. The first is frequent events. Elections and macro outcomes are sporadic. Sports is daily. The second is social distribution. Fans already debate probabilities, injuries, and momentum in public. A tradable market turns that conversation into an action. The third is feedback. Users settle quickly, which reinforces learning and habit.
Kalshi also launched "combos" in fall 2025, multiple leg trades similar to parlays. That is not just a feature copy. It is a frequency and engagement move. Combos can increase average order size and create new narratives for why someone places a trade, not just who wins, but combinations of outcomes.
You can see the platform behaviour shifting in late 2025, with reports of over $1B per week in volume and an $867M week ending October 19, 2025, alongside total prediction market volume surpassing 2024 election peaks. Sports volumes approaching $1B per week in November 2025 is the kind of throughput that makes everything else easier, paid acquisition efficiency, creator partnerships, and broker conversations.
My view is that sports was not a category expansion. It was the category that taught the product how to be consumer.
Regulation as a growth advantage
Regulation is usually framed as a constraint. In this category it can be a differentiator, because the legal wrapper determines distribution. Kalshi operates under CFTC regulation and is cited as being available in all 50 states, compared with traditional sportsbooks operating in 39 states plus DC. Even if you ignore everything else, that is a bigger addressable footprint.
More importantly, the regulatory posture changes partner appetite. Broker integrations are easier to imagine when the instrument looks like an event futures contract rather than an offshore betting product. That framing matters for compliance teams, payments teams, and brand risk. Growth is often decided by which partners can say yes.
There is also a practical marketing effect. Users are wary of financial apps that feel grey. A regulated narrative reduces hesitation, which improves conversion at the top of funnel and reduces drop off during KYC. If you have ever watched a funnel die at the identity step, you know how valuable that is.
Kalshi also expanded to 38 states via a PrizePicks partnership in November 2025. Partnerships like that are not just distribution, they are legitimacy signals. They tell users that the product belongs in the mainstream stack of sports and finance.
For founders in adjacent categories, the lesson is uncomfortable but real. Sometimes the best growth hack is legal and compliance architecture that unlocks distribution. If you can build a product that partners can safely embed, you will outgrow the product that has to be downloaded and trusted from scratch every time.
Why prediction markets can forecast well
Prediction markets do not predict the future in a mystical way. They do something more useful, they turn dispersed beliefs and information into a continuously updated price. When designed and liquid, that price is often the best available real time summary of what a crowd thinks will happen.
The mechanism is price discovery under incentives. If a participant believes the market probability is wrong, they can trade. If they are right, they profit. If they are wrong, they lose. Over time, that pressure can move prices toward the collective best estimate given what participants know.
Accuracy, in practice, is not a single number. It depends on participation quality, liquidity, and whether the market is resilient to manipulation. Thin markets can be pushed around. Deep markets tend to absorb noise and incorporate new information faster. That is where growth and forecasting quality are directly linked. When Kalshi scales volume from $183M in 2023 to $1.97B in 2024, and then sees weeks approaching or exceeding the billion dollar mark in late 2025, you should expect the most active contracts to become more informative, not because the company got smarter, but because the market got thicker.
For marketers, the interesting part is that a credible probability becomes content. Journalists, analysts, and creators like quoting a number that updates in real time. If your market is liquid enough to be quotable, you get earned distribution that looks like authority.
The best way to improve the forecasting usefulness of a prediction platform is often boring, more liquidity, better contract design, and settlement everyone trusts.
What happens when institutions show up
Retail attention can create the first wave of liquidity. Institutional participation can create the second wave, but it changes the product requirements. Kalshi has signalled longer term institutional goals, and the market has started to price that future in, with an $11B valuation attached to the $1B round in November 2025.
Institutions do not show up for vibes. They show up for robust market structure, predictable settlement, and the ability to move size without moving the price too much. If prediction markets keep printing volumes like over $1B per week in late 2025, and if open interest in sports contracts is regularly above $100M, the next constraint becomes market microstructure and risk management rather than consumer acquisition.
There is also a competitive implication. Once a platform becomes the reference venue, liquidity concentrates. That makes it harder for smaller entrants to bootstrap meaningful markets. You can already see other players raising, like competitor Novig raising $18M in August 2025, but the gap between raising and building a liquid venue is enormous.
My hard opinion is that the endgame is not that everyone has a prediction market. The endgame is that a small number of venues become the reference layer for event probabilities, the way a handful of exchanges became the reference layer for equities. If that happens, the biggest threat to platforms like Kalshi is not another startup. It is being treated like a commodity data feed by brokers and media while the venue economics get competed away.
In that world, the winners will be the platforms that defend their liquidity moat by owning distribution and by continuously listing the markets people care about before anyone else does.
