Prediction market volume is expected to reach $10 trillion per year by 2035, growing at an impressive annual rate of 70%, as per recent research by Bernstein analysts.
Gautam Chhugani and team analysts predict a $410 billion turnover in yes/no exchanges for this year, indicating potential for a more than twentyfold increase to $10 trillion in 2035.
The $10 trillion projection also signifies substantial growth within a five-year period compared to previous optimistic estimates for 2030. In April, Bernstein forecasted a $1 trillion prediction market volume for 2030, while Bank of America projected market growth to $1.1 trillion annually. Macquarie analyst Chad Beynon’s July report included a forecast of $1.5 trillion in yearly volume by 2030.
If Bernstein’s $10 trillion prediction market turnover projection is accurate or surpassed, it could generate significant revenue, as the firm previously estimated that $1 trillion in annual activity could result in up to $10.8 billion in operator revenue.
Decline in Sports Event Contract Share Expected
While sports event contracts currently dominate the prediction market industry, Bernstein suggests this trend will not remain constant. The firm forecasts a decline in sports derivatives’ industry volume share to 35% by 2035, with growth driven by other categories.
By 2035, financial derivatives, including contracts linked to commodities, cryptocurrencies, and stocks, are expected to represent 49% of turnover on yes/no exchanges, surpassing sports as the leading volume driver. The rise of event contracts related to key performance indicators (KPIs) is anticipated.
“We expect new products such as KPI markets, which allow users to trade a single corporate metric, such as production, deliveries, or subscriber growth, rather than the stock price itself,” observe the analysts. “Further, perp futures are expanding from crypto to commodities and single stock perps.”
Several exchange operators are planning to introduce KPI-linked event contracts tied to metrics like corporate earnings, Apple iPhone shipments, or Tesla deliveries, indicating a shift towards non-traditional sports contracts.
Financial Derivatives Growth on the Horizon
While sports event contracts continue to attract attention in the prediction market sector, there is evidence of growth in other categories. Cryptocurrency event contracts already comprise 20% of turnover on major prediction markets.
Another positive indicator is the significant growth in commodities contracts volume, which surged from $2 million to over $410 million in August alone and is approaching $600 million year-to-date.
Bernstein predicts that the global financial contracts market will expand to $900 trillion by 2035, and if prediction markets capture just 0.5% of that total, annual volume could increase by $4.7 trillion.