Sports-First Startups Look to Compete in Trillion-Dollar Prediction Market Industry

Every day we open Twitter, it seems, there’s news of another company with designs on the prediction market space. While the flood of entrants and ongoing regulatory uncertainty prompt warnings of a bubble, the potential for the emerging industry is too immense to keep any sort of cap on aspirationals.

It reminds us of the early days of legal online sports betting, when operators surged into the market after the Supreme Court struck down PASPA in 2018. Eight years later, dozens of would-be competitors have fallen off the map in an industry where two dominant players account for the vast chunk of market share and a handful of others battle for the rest.

Here in 2026, Kalshi has emerged as the dominating force in prediction markets, but by the time the industry explodes to $1 trillion in volume by 2030, as Bernstein projects, Kalshi and its key rival Polymarket may not exactly be analogous to FanDuel and DraftKings.

“Every transformational industry has had early pioneers, but history consistently shows that today’s leaders are not necessarily tomorrow’s dominant companies,” Laila Mintas, founder & CEO of 365Prediction, told Gambling Insider. “Few people remember that Google wasn’t the first search engine and Facebook wasn’t the first social network and Netflix didn’t invent streaming and Apple didn’t invent the smartphone. 

“They became leaders because they built a better product, created a superior user experience, executed exceptionally well and scaled at the right time.” 

365Prediction’s application for a DCM (Designated Contract Market, an exchange where event contracts are listed and traded) and DCO (Derivatives Clearing Organization, which guarantees trades are settled) is pending with the CFTC.

Even if Kalshi and Polymarket are never removed from the head of the table, a small slice of the prediction market pie may be plenty satiating. The pie’s key ingredient: $145 trillion in assets under management at major brokerages.  

“That’s a massive number,” said Dean Sisun, co-founder and CEO of ProphetX, which was approved as a DCM and DCO last month. “If we turn prediction markets on across all those assets, how much is gonna get turned over year over year? It’s gotta be in the trillions. 

“Now all the legitimate market makers are coming into this space, now there’s gonna be national ability to access these markets. Who knows how big the market size is gonna be. You can capture 10 basis points of it and be a multi-billion dollar company.”

ProphetX’s B2B Gameplan  

Just as it is for sportsbooks, customer acquisition is costly for prediction markets, and with deep-pocketed players like DraftKings and FanDuel entering the space against the likes of Kalshi and Polymarket, competing in the B2C market is getting particularly expensive.

B2B, therefore, is ProphetX’s focus, and the company will have five or six partnerships live by football season, Sisun anticipates. The first wave will be with ISVs (independent software vendors), with FCM (Futures Commission Merchant) deals on the roadmap upon the CFTC’s approval. Sisun also mentioned partnering with sports companies.

“Our game plan is not to entirely compete in that B2C market. It’s gonna get flooded really quick,” he explained over a 30-minute phone call. “I think we can make a decent chunk of money from that, but we’re not gonna be one of the top three players in the space. We don’t have billions and billions of dollars in our product. Although we think it’s better and maybe the best in the space, it’s not billions of dollars better, where we can win without spending that type of money in that market.  

We think our bigger growth opportunity is on the B2B side, and we really wanna compete against the crypto.coms and the Kalshis of the world there.”

Building for Sports Bettors

There’s an incongruity with prediction markets in their current state. Sports are driving a large majority of volume, but the platforms are designed for consumers inclined to trade stocks and crypto, not necessarily sports bettors.

Sisun and Mintas, both of whom have roots in sports betting, believe their sports-focused products are a better fit for the fan who likes to gamble on games.

“Most operators that I’m seeing look like order books,” said Mintas. “It’s a product built by traders for traders, and it’s not close to what I feel is a sports-engaging or fan-engaging experience. I think there’s a lot of room to improve that, and that’s why our playing field is sports-first and socially-driven. Social and fan-engaging is the differentiator from my perspective and what will succeed in that market.”

Sisun and COO Jake Benzaquen founded their company as Prophet Exchange, initially intent on competing in the state-regulated environment. After being granted a license only in New Jersey (2022), they pivoted to the sweepstakes model before turning to prediction markets, in line with their original vision of running a true sports betting exchange.

ProphetX wants to operate where the sports fan and financial trader intersect, and Sisun promises a new look for the product in time for football season.

“Our home page, our user experience is getting a makeover, making it in the theme of being for sports enthusiasts who also like to trade,” he said. “Kind of finding that middle ground. What we like to say here is, “everyone wants a sportsbook experience but exchange prices and features, so how can you thread the needle?” 

The Obsoletion of Sportsbooks?

When we reached out to gambling industry insiders for their 2026 predictions, many forecast a gloomy future for sportsbooks.

Mintas went so far as to say, “State by state sports betting is dead and will only be used by the local casino providers such as BetMGM and Caesars, while prediction market companies and regulation will take over the market in 2026.”  

Sisun has a similar take, writing on Substack that ProphetX is “a sports prediction market aimed at making sportsbooks obsolete.”

Mintas stands by her prediction.

“I think it looks pretty accurate so far,” she told us. “Every iGaming or online sports betting company in the market is now moving into prediction markets, right? FanDuel, DraftKings, Fanatics, you name it, there are announcements every week of new companies entering the market.” 

Companies like Caesars and MGM, whose business is largely driven at land-based casinos, may be putting their Nevada licenses at risk by launching prediction market products. 

“I think they have to eventually think about the consequences of not moving into the space,” Mintas advised. “If they don’t move forward, they might be the big losers at the end of the day, and it might be much better for them to consider getting into the prediction markets instead of fighting it.”

Beyond a sports betting experience with exchange pricing, Sisun stresses prediction markets offer customers a wide range of features absent from sportsbooks.

With prediction markets, he pointed out, “I also have the ability to create a limit order. I can edit my open position. I can trade it. I’m not limited. I’m not kicked out. I can use the API. I can market make if I want.

You can’t do any of that in a sportsbook. It’s just such a more limited product.”

The advantage sportsbooks do have, Sisun continued, is with illiquid markets such as niche player props that operators leverage as a customer-retention mechanism.

“That is their biggest strength,” he said, “but if an exchange can solve that, I think sportsbooks can certainly be made obsolete.”

Regulation is Welcome

Mintas’ 365Prediction and Sisun’s ProphetX are among dozens of companies looking to establish themselves in prediction markets even as multiple legal and regulatory forces seemingly work against them. There are courtroom battles in states all over the country – in fact, Kalshi’s sports event contracts have been banned in Michigan and Nevada – some 25 bills addressing prediction markets have been introduced in Congress, and the next administration is unlikely to be as friendly to the industry as the current one. Many observers believe prediction markets’ ability to offer sports markets will ultimately be decided by the Supreme Court. 

Right now, though, companies are getting in and making money while they can. There’s also a “too big to fail” mentality, that prediction markets will become so entrenched, it will be nearly impossible for a piece of legislation or court decision to unwind them.

Mintas is comfortable with the regulatory uncertainty.

“We don’t view this as a sign of the industry being unsustainable. I think it’s quite the opposite,” she said. “So many transformative industries, including online brokerage, sports betting, cryptocurrencies and even rideshare went through extended periods of legal and regulatory frameworks and developments before reaching mainstream adoption. …

That process ultimately creates clearer routes, greater consumer confidence, and a stronger foundation for institutional participation, and companies that embrace regulation and build this compliance at their core are likely to be best positioned for long-term success.”

Sisun hopes the industry’s voices are heard by regulators, lawmakers and justices.

“All we can do is try to put ourselves in the best position possible, and really the way to do that is by educating them on understanding why a sports exchange should exist, understanding why the sportsbook model is predatory versus an exchange model, understanding why this should be the way forward,” he said.  

“At the end of the day, I hope that whoever makes the decision – if it’s a congressional decision or if it’s a Supreme Court decision – understands all the facts. If they understand all the facts, I fully believe that we would be on the right side of history.”