Prediction markets are exploding.
Monthly trading volume reportedly reached $25.7 billion in March 2026, while longer-term forecasts suggest the industry could eventually become a trillion-dollar market.
Now prop firms want in.
But there is a strange disconnect.
Prediction markets are attracting record interest, yet some of the first prop firms to enter the space are questioning whether the current product works for active traders.
Prediction Markets Have Gone Mainstream
As of July 2026, Kalshi says it has more than 5 million active registered users, while Polymarket reportedly has approximately 2.3 million.
Analysts estimate that more than 17 million people worldwide will use prediction markets this year.
This is not only institutional money. During the first quarter, 82% of Polymarket users reportedly traded less than $10,000 in total, while the average trade was approximately $35.
Much of the growth is being driven by ordinary retail participants placing relatively small positions on sports, politics, crypto and economic events.
Sports have been the biggest catalyst.
Approximately 85% of Kalshi’s notional volume reportedly comes from sports contracts. Sports account for a smaller, but still significant, 39% of Polymarket’s volume.
The World Cup accelerated that growth by providing globally recognized events, frequent matches, clear outcomes and contracts that settled relatively quickly.
Prop firms saw the demand and moved fast.
The First Prediction Market Prop Firms
ForTraders was the first prop firm to experiment with prediction markets, launching a beta product in March 2026.
Maven Trading followed in April, becoming the first firm to launch a live commercial prediction market prop offering ahead of the World Cup.
Prop.Market and FundingPredicts arrived shortly afterward. TradeCatalyst launched in June, followed by Odds-on in July with a stronger sports focus.
The category went from an experiment to a new prop-firm product line in only a few months.
However, the experiences of the earliest firms suggest that strong consumer demand for prediction markets does not automatically create a sustainable prop-trading product.
What Maven Founder Chris Hunter Told Us
Maven Founder Chris Hunter told us thatMaven recognized prediction markets as a rapidly growing adjacent category, launched an early commercial prop-style offering before the World Cup, used the tournament as a focused test of trader demand and engagement. They are now monitoring whether the interest would persist beyond a major event cycle and which future catalysts could support a sustainable product.
The World Cup can create enormous short-term interest. But building a sustainable actively traded prop product requires more than attracting traders during one global event.
WhatForTraders Learned Early
ForTraders’ beta also provided another important reality check.
ForTraders CEO Jakub Roz Told Us“From our early experience, prediction markets are a challenging fit for financial products. There simply aren’t many tradable events on any given day, and even fewer with meaningful volume and volatility.”
“For now, most traders prefer to trade crypto as a CFD on normal charts because they can analyze the charts, access their indicators, use greater capital and enter or exit whenever their setup appears.”
That is a significant difference.
A traditional trader can open a Bitcoin chart, analyze price action, use technical indicators, set a stop loss and exit whenever market conditions change.
With many prediction contracts, the trader is limited to a yes-or-no outcome, a probability price and an order book that may have limited liquidity.
That can feel much more restrictive.
ForTraders’ early findings could be extremely valuable for every firm entering this category.
Prediction prop firms need enough liquid events to prevent traders from forcing positions. They may also need more realistic profit targets, longer evaluation periods, better charting tools and contracts that resolve faster.
“Prediction markets behave very differently from futures or CFDs. Binary payouts, jump-to-resolution risk and fragmented liquidity make execution and risk management far more complex. FundingPredicts is addressing this with multi-venue smart order routing and a consolidated order book designed to smooth liquidity gaps. The My Funded Futures team, particularly CEO Matt Leech, has been instrumental in guiding our development as we build for the future of event-driven trading.”
Justin Hertzberg, CEO of FPFX Tech, sees the current concerns as growing pains rather than long-term obstacles. He thinks "Prop firms need to offer something for everyone. The broader the offering, the greater the ability to attract, retain, and grow users. Some prediction market prop traders will participate seasonally, while others will trade year-round. However a user may arrive for one market and discover another that keeps them on the platform, which is why the opportunity needs to be multi-asset. Ultimately, it is about exposure. I am also not overly concerned about liquidity as institutional participation increases, bringing deeper markets, tighter spreads, and more efficient order books.”
Why Kalshi Can SucceedWith Longer Contracts
The key distinction is that Kalshi and prediction prop firms have very different business models.
A Kalshi customer can place $50 on an election, sporting event or Federal Reserve decision and wait weeks for the outcome.
Kalshi does not need that customer to trade every day or hit a profit target. It earns transaction fees, but it can also earn interest on unused customer cash held on the platform. Longer contracts can therefore keep capital inside the ecosystem for extended periods.
Kalshi can also monetize the probability data created by its markets through APIs and partnerships with financial institutions, analysts and media organizations.
Prediction prop firms usually do not have the same additional revenue streams – for now.
They depend much more heavily on challenge purchases, account resets, trader activity and the relationship between evaluation revenue and payouts. In order for the model to work, shorter dated contracts and more activity is needed.
Can Prediction Prop Firms Become Sustainable?
Prediction market prop firms have real potential.
Retail interest is growing, major infrastructure providers are entering the category, and more firms are preparing to launch.
But the challenges are equally real.
There may not be enough tradable events each day. Liquidity can be limited. Volatility may be inconsistent. Longer contracts tie up buying power, while shorter contracts create greater gambling and regulatory concerns.
The World Cup proved that major events can attract traders.
Maven and ForTraders are now testing whether the product can remain viable when that excitement fades.
Regulation is also a concern. On July 3, ESMA reminded firms that event contracts with binary payouts linked to financial instruments are already prohibited for European Union retail investors under the binary-options rules introduced in 2018.
Prediction market prop firms are increasingly viewed as the prop industry’s next major growth vertical.
But first, they must prove that a product designed for occasional event speculation can be transformed into a sustainable market for funded traders.