Opinion: US forecasting market booms but bubble risks exist: regulatory game and liquidity bottlenecks are key variables.

Analysis indicates that the boom in the US prediction market is built on an unstable foundation, primarily benefiting from regulatory arbitrage opportunities. For example, currently, US states lack comprehensive regulations to oversee user participation in sports betting through prediction markets. Dune Analytics data shows that in 2025, sports-related transactions will account for approximately 85% of Kalshi's trading volume, while Polymarket's will account for approximately 39%. Devin Ryan, Head of Financial Technology Research at Citizens Bank, believes the market needs to establish robust integrity rules, and trading volume in non-sports markets needs to increase. Currently, the market size for predicting January CPI inflation data on Kalshi is less than $1 million, and the market size for predicting core inflation is less than $30,000. Such liquidity is insufficient to attract institutional participation. Furthermore, the US prediction market currently exhibits a "fragile boom," with growth relying heavily on regulatory gray areas and substantial marketing investment. Growth could be pressured if regulations tighten or user interest declines. There is also some bargaining at the regulatory level. For instance, US prediction markets typically claim to be event-driven contracts regulated by the Commodity Futures Trading Commission (CFTC), but state-level regulators are more cautious, and related legal disputes may ultimately reach the Supreme Court. (Business Insider)