Once a niche application of event contracts within regulated derivative exchanges, prediction markets are now expanding rapidly across asset classes and jurisdictions, drawing institutional capital, regulatory attention, and the serious interest of exchange operators worldwide. Monthly notional trading volumes surged from under $100 million in early 2024 to over $13 billion by late 2025, a scale of growth that few asset classes have witnessed in such a compressed timeframe. For those looking to capitalise on that opportunity, understanding both the forces behind that trajectory and the infrastructure requirements it demands is increasingly pressing.

What are prediction markets?

Prediction markets are regulated trading venues where participants buy and sell event contracts based on the outcomes of real-world events. Prices reflect the collective probability assigned to each outcome, making real-world event trading a live, data-driven signal on everything from economic indicators to political developments events. Event contracts are the instrument that makes this possible: each is structured with a binary outcome of “yes” or “no,” and can reference a wide range of underlying events, from company earnings and economic indicators to election results and weather outcomes.

The regulatory turning point came when Kalshi challenged the CFTC in court and won in 2024, opening the door to regulated event contracts on political and financial outcomes. Building on this, the CFTC marked a further policy shift in 2025 by formally designating Polymarket as a fully regulated US derivatives exchange, signalling that prediction markets were moving from a grey area into a supervised asset class. For operators, that created a clear roadmap: invest in robust prediction market infrastructure, meet surveillance and reporting obligations, and prediction markets become a pathway to a legitimate and scalable asset class.

The shift to always-on, event-driven markets

Since then, the institutionalisation of prediction markets is well underway. Major regulated financial institutions and capital market operators are recognising prediction markets as a viable new asset class for risk hedging and forecasting. Capital commitments signal a structural shift rather than a passing trend, most notably a $2 billion commitment from ICE alongside the strategic partnership between CME Group and FanDuel.

Retail participation is reshaping the demand profile in parallel. These markets are intuitive and accessible, with simplified contract structures and live pricing that lower barriers to entry and attract a new generation of participants. Entry points can be as low as $1 per trade, a threshold far below what traditional markets typically require.

Operationally, the model has evolved accordingly. Prediction markets pioneered 24/7/365 trading, built initially on crypto infrastructure that carried no legacy assumptions about session hours or scheduled downtime. Platforms like Kalshi have since committed to near-continuous trading schedules, setting a precedent that exchange operators are taking increasingly seriously. Event-driven contracts create liquidity cycles tied to real-world developments, and users now expect their trading venues to respond in kind.

Navigating the regulatory and operational frontier

The scale of this growth has drawn equally significant scrutiny. At the jurisdictional level, prediction markets sit at a contested boundary between federal derivatives regulation and state-level gaming law. Gaming associations, Tribal nations, and several US states have filed lawsuits and cease-and-desist letters challenging the legality of event contracts within their jurisdictions. The outcome of these disputes will shape the geographic reach of the market for years to come. 

Beyond jurisdiction, market integrity is an equally pressing concern. Financial institutions have identified the specific risk of employees with access to material non-public information using event contracts to trade on the outcomes of financial events. Enforcement actions, including the CFTC’s earlier settlement with Polymarket, established an unambiguous marker: the future of this market category depends on verifiable governance and robust operational transparency. Institutional adoption requires a credible compliance framework alongside capable technology.

Auditability sits at the core of that challenge. Platforms must maintain a complete and auditable record of every event, with deterministic event logging and time-sequenced data tracing the full lifecycle of each order from entry to settlement. Open standards and API connectivity further enable regulatory bodies and external counterparties to independently examine market activity. Without this foundation, market confidence remains difficult to establish.

Continuous trading also introduces distinct infrastructural strain. Managing margining, funding, and settlement across an uninterrupted session creates complexity that legacy systems were not designed to absorb. Platforms must deploy updates and manage performance without service interruption, a capability that requires purpose-built architecture rather than incremental adaptation.

Technology that meets the moment

Meeting the demands of modern prediction markets requires technology built from the ground up for this environment. Four capabilities sit at the centre of that requirement:

Matching and execution designed for event-driven trading. Binary and multi-outcome contract compatibility enables flexible market design, with low-latency execution ensuring responsive pricing during fast-moving conditions. Seamless connectivity with market makers and specialist surveillance partners maintains market integrity throughout.

Integrated risk controls and automated settlement. Pre-funded risk controls ensure trades are fully collateralised from execution through to resolution, with automated settlement managing the complete post-trade lifecycle. Flexible support for different contract and trading structures allows platforms to adapt as market models continue to evolve.

Transparency and compliance by design. Built-in traceability and full visibility into order flows support reporting obligations and regulatory oversight. Cloud-agnostic deployment enables operators to meet security and compliance requirements across diverse deployment environments, without lock-in to a single vendor or technology approach. Regulators increasingly expect this level of openness as a baseline.

Speed to market. Pre-built, modular technology reduces a years-long build timeline considerably, allowing operators to enter the market faster and scale with growing participant demand.

Enabling innovation without compromising trust

Prediction markets are redefining how participants engage with risk and rapidly changing information by offering trading in event contracts. Their continued growth depends on technology that supports that ambition while maintaining regulatory confidence and market integrity. As institutional and retail engagement converges, the exchanges that define this space will be those that can scale with demand and satisfy regulators without compromising operational continuity.

The opportunity is significant. The decisions made today about technology and architecture will determine which operators are positioned to capture it.

Find out more

Exberry delivers purpose-built prediction market infrastructure, enabling operators to build and scale event markets with real-time trading, integrated risk controls, and regulatory-ready transparency. To learn more, visit https://www.exberry.io/prediction-market-matching-engine-exberry/