Kalshi and Polymarket represent two opposite origins of prediction markets. One was built inside US financial regulation, and the other emerged from crypto’s open culture. Their rivalry reflects a deeper conflict between institutional trust and permissionless innovation.
The 2024 US election forced both platforms onto the same regulatory stage. Kalshi won a historic legal ruling enabling regulated election markets, while Polymarket reentered the US by acquiring a fully licensed exchange. This brought the two models into direct competition for the first time.
The future of prediction markets is convergence, not separation. Kalshi is moving toward blockchain rails and global distribution, while Polymarket is moving toward regulated structures and institutional trust. Both are evolving toward a shared role as part of the information infrastructure that prices future events.
Prediction markets were long treated as small experiments far from the center of global finance. But the events of 2024 and 2025 changed that assumption overnight. As political tension rose and macro uncertainty shaped every conversation, the idea of “pricing the future” suddenly felt not only useful but necessary. Markets realized that events could be traded like assets. Outcomes carried measurable value. Risk could be expressed not through opinion but through price.
Two platforms led this shift. Kalshi and Polymarket share the same mission but emerged from opposite worlds. One built from within the US financial system. The other born from crypto’s open culture. One anchored in regulation. The other defined by permissionless design. By 2025 these two forces collided on the same stage and reshaped the future of prediction markets.
To understand the industry today, you cannot only compare features. You must look at origins. How each defines truth. How each manages uncertainty. How each earns trust. The rivalry between Kalshi and Polymarket is more than a business contest. It is a long chapter in the tension between institutional logic and open market logic. And that tension now defines the direction of an entire sector.
Origins and Identities
How a Regulated Exchange and a Crypto Experiment Formed Two Opposing Models
If prediction markets represent a new way to understand information, then Kalshi and Polymarket represent two very different ideas of how that system should work.
Kalshi grew inside the mindset of traditional finance. Its founders saw a clear gap. Investors could hedge rates, commodities, or volatility but had no legal tool to hedge political or macro outcomes. Events like Brexit or US elections created real economic exposure yet lacked a proper market structure. From day one, Kalshi refused shortcuts. It faced the regulatory process directly. With no product on the market, the team spent years working through US rules. In 2020, it became a designated contract market under the CFTC, joining the same legal category as major futures exchanges.
Polymarket came from the opposite direction. It grew out of crypto communities where openness and speed matter more than formal structure. Instead of bank accounts and clearinghouses, it started with wallets and real-time settlement. UMA’s optimistic oracle handled resolution. Anyone could join with a few clicks. This created fast growth and a distinct culture that blended trading with internet attention.
For years, the two paths barely touched. Institutions went to Kalshi. Crypto natives went to Polymarket. But during the 2024 election cycle, attention surged. Suddenly, the two models approached the same center. Both had to answer the same deeper question: What gives a market legitimacy? The system behind it or the participation within it.
Regulation as a Battleground
Why the 2024 US Election Forced Both Platforms to Face the Same System
The US election did more than move prices. It forced the entire prediction market industry to confront a question avoided for years: Who is allowed to let people trade political outcomes? And on what legal basis?
Kalshi confronted this question directly. The CFTC had long blocked political markets by calling them gambling. Kalshi challenged this interpretation with a strict reading of the law. Elections are civic processes, not games. In late 2024, a federal court agreed. This ruling changed the industry. For the first time in modern history, a regulated US exchange received the right to list election markets. Capital waiting on the sidelines moved in immediately, and Kalshi’s volume reflected it.
Polymarket took a different route. After being fined in 2022, it barred US users. But in 2025, it made a decisive move. Instead of starting from zero, it acquired QCEX, a dormant exchange with full CFTC licenses. This let Polymarket reenter the US under a regulated structure. It also forced a shift. The US version now follows KYC rules and uses a custodial model, unlike its global permissionless version.
At this point, both platforms stood on the same ground. Kalshi came from regulation outward. Polymarket came from crypto inward. Both realized the US market was too important to ignore. The election cycle became the peak of their rivalry and a moment that shaped their long-term strategies.
Market Structure and Liquidity
How Technology, Fees, and User Behavior Created Two Competing Systems
Prediction markets are not only about who is more accurate. They depend on how the market works. Microstructure, fee design, and liquidity depth decide whether a platform can survive stress, volatility, and rapid shifts in attention.
Kalshi uses a central limit order book with dollar settlement. This fits institutional expectations and provides legal clarity. But it also brings friction. During peak moments, the system may slow down or struggle with load. Banking rails limit settlement speed and create delays that crypto users never see.
Polymarket built around a different idea. It moved from pure AMM to a hybrid order book to support larger flow. With on-chain execution and global access, it attracted active traders and cultural attention. But it also exposed itself to new risks. Oracle governance incidents showed that open systems can produce outcomes traditional exchanges never face.
Fees created another divide. Kalshi’s average fee is above one percent, depending on volatility. Polymarket’s US app charges 0.01 percent. The difference is simple but powerful. For active traders, fee friction determines where liquidity goes.
Liquidity patterns tell the clearest story. Polymarket dominates long-tail cultural and social markets. Kalshi dominates macro and regulated markets. In the 2024 to 2025 cycle, liquidity moved between the two platforms like alternating tides. Polymarket captured early global attention. Kalshi captured regulated capital after legal approval. Each built strength in different zones of the liquidity map. The next question is which zone becomes the foundation layer for the industry as a whole.
Convergence and the Future
Why Both Platforms Are Moving Toward the Same Destination
The next phase of prediction markets will be shaped not by separation but by convergence. Both platforms are already moving toward each other.
Kalshi is exploring blockchain integrations through Solana and Base. It wants faster cycles and global distribution. It knows the future of event trading cannot rely only on banking rails. Polymarket is moving toward institutional trust. It now operates a regulated structure for US users and follows CFTC rules. It understands that long-term growth needs legal clarity and a stable framework.
Their identities are beginning to overlap. Kalshi aims to become the regulated settlement layer for Web3. Polymarket aims to become the low-fee prediction engine of the US market. Both are climbing the same mountain from opposite sides.
The deeper shift is how society now treats prediction markets. They are no longer simple betting tools. They are becoming part of the information layer. Media outlets treat them as real-time signals. Companies may use them to measure risk. Communities use them to understand sentiment. Once prediction becomes infrastructure, it shapes how people think about the future itself.
Kalshi brings institutional trust. Polymarket brings cultural momentum. Together, they are pushing the industry toward a world where markets do not only price assets but price events, attention, and emerging realities.