Author: Changan, Biteye Content Team

A few days ago, many KOLs on X suddenly discovered that the badge symbolizing cooperation with Kalshi had disappeared from their accounts.

Prediction News reported on this, and soon a screenshot that made people chuckle circulated: Polymarket's official account quietly liked the report.

The business rivalry between Polymarket and Kalshi has been ongoing for a long time, and the prediction market is entering a true duopoly era.

On one side is cryptocurrency-native Polymarket, and on the other is the compliant financial system of Kalshi.

The essence of this competition is not which company is stronger but rather: who will hold the future information pricing power, Crypto or Wall Street.

Therefore, this analysis is worth doing.?

1. Chronicles of Business War: From Regulatory Games to Offline Confrontation

In the past year, the competition between the two companies has escalated from product rivalry to a multi-dimensional battle involving channels, regulation, and public opinion.

1. Valuation Competition: A Capital Counterattack in 41 Days

On October 7, 2025, Polymarket announced that it had received a $2 billion strategic investment from ICE, raising its valuation to $9 billion.

Three days later, Kalshi announced it had completed a $300 million Series D funding round, with a valuation of $5 billion. The timing was so precise that it was hard to believe it was just a coincidence.

But Polymarket clearly did not intend to stop. On October 23, Bloomberg reported that Polymarket was in talks with investors to prepare for a new funding round, aiming to raise its valuation to $15 billion.

On November 20, Kalshi's response came: it completed a $1 billion financing round, and its valuation directly surged to $11 billion, led by Paradigm. Not only did it surpass Polymarket's previous $9 billion valuation, but it also quickly approached the $15 billion financing goal, just 41 days after the announcement of its last Series D financing.

2. Cultural Breaking: A Battle for Traffic

On September 24, 2025, a preview for Episode 5 of Season 27 of "South Park," titled "Conflict of Interest," was released, which would feature content related to prediction markets.

As soon as the news broke, both platforms realized the opportunity – this was the first time prediction markets had entered the mainstream cultural spotlight. The one who could convert this attention into trading volume first would take a larger piece of the pie in the breakout bounty.

Kalshi and Polymarket quickly launched a series of markets closely related to the plot, allowing users to bet on the storyline on their platforms right away.

On the day the episode aired, the Kalshi team collectively switched to South Park cartoon-style avatars, flooding X and embedding the brand firmly into the day's hot discussions. Both platforms seized every available marketing opportunity to convert the trending topic into transactions.

3. Ecological Affiliated Accounts and Tagging Wars

As both platforms' user bases rapidly expanded, Polymarket and Kalshi launched their affiliate account programs almost simultaneously in the second half of last year, starting to give KOLs, traders, and ecosystem projects badges on X.

Polymarket acted faster: the Trader badge was used to certify active traders, encouraging them to share strategies and positions on X to drive traffic to the platform. The Builder badge was aimed at ecosystem projects to attract developers to build applications on the platform, gaining more exposure with official endorsement.

At the same time, Polymarket also launched a $1 million Builders incentive program to bring developers into the ecosystem with real cash.

Kalshi quickly followed suit, rolling out a broader badge system covering sports, culture, and trader certification, replicating this model in its more advantageous sports and popular market sectors.

Now, traders in the prediction market on Twitter wear either Polymarket's badges or Kalshi's badges.

4. Offline Marketing Showdown: The Manhattan Free Goods Battle

On February 2, 2026, Kalshi announced on X that it would provide free food at Westside Market supermarket for users from 12 PM to 3 PM the following day, with a maximum of $50 per person. As soon as the news broke, long lines formed as students and low-income groups flocked to the scene, creating quite a buzz.

The next day, on February 3, Polymarket swiftly responded by announcing it would open its first free food pop-up store in New York, open to the public for five consecutive days. The rules were simple: customers could fill a bag to take away, with no additional conditions. Meanwhile, Polymarket also announced a $1 million donation to the Food Bank for New York City to address food security issues across the city.

The two events occurred back-to-back, generating a lot of tension.

5. Arms Race in Regulation and Political Resources

Both sides never ceased their lobbying machines in Washington, coincidentally bringing in Donald Trump Jr. to stand for them, aiming to leverage Republican regulatory resources and lay down political chips in the arena of public opinion.

But beneath the surface, the real battlefield is distributed across two dimensions: the regulatory gaps in CFTC rules and the defensive/offensive maneuvers in state courts.

Polymarket, through its offshore structure, evades direct regulatory fire while quietly paving the way into the U.S. market by acquiring QCEX; Kalshi, on the other hand, chose a direct confrontation, holding the first CFTC license for prediction markets, but thus became a live target for state-level prosecutors – currently at least four states have filed lawsuits against it, accusing it of unlawfully accepting bets from local users.

This straightforward business battle is no longer just a competition of products but a comprehensive war of political capital and traffic monopolization.

2. Hard-Core Comparison: Breaking Down the Titans in Five Dimensions

2.1 Trading Data Comparison: The Disjointed Growth of Political Cycles and Sports Calendars

As of February 2026, the total Notional Volume across the prediction market industry is $127.5 billion, with an actual Volume of $69.9 billion, 2.49 million independent users, and open contracts exceeding $1 billion.

Polymarket and Kalshi combined occupy about 79% of the market share. Polymarket ranks first with $56.07 billion Notional Volume, followed closely by Kalshi with $44.71 billion. In terms of Open Interest, Kalshi is slightly ahead with $474.01 million compared to Polymarket's $409.67 million, with both together accounting for over 85% of the total market OI.

Looking at the trends, both companies' growth is highly event-driven. Polymarket's OI surged to $500 million around the 2024 election, then fell back; Kalshi's OI rapidly increased starting with the 2025 NFL season, reaching its historical peak by the end of 2025.

Both platforms are seeing growth, but driven by different factors. One relies on the political cycle, the other on the sports calendar.

(Data source: Dune, data as of February 26 at 11:00 AM)

2.2 Revenue Comparison: Verified Dynamic Rates vs. Newly Established Taker Fees

The charging logic of the two platforms is fundamentally different.

Kalshi

Uses a probability-weighted dynamic fee rate: Trading fees are charged based on contract prices, with rates varying according to contract price movements, peaking at 50 (that is, a 50/50 probability) and tapering off towards 0 or 99. For a $100 trade, the maximum fee is about $1.74, with an effective rate of about 1.2%.

Revenue in 2024 was $24 million, with 2025 revenue expected to be $260 million, a year-on-year growth of 994%. However, revenue is heavily concentrated in the sports season: the NFL season (September to November) alone contributed $138 million, and December registered $63.5 million in a single month, setting a new historical high, while off-season revenues fell significantly, displaying clear seasonality.

Polymarket

Looking back at Polymarket, they took a completely opposite path. Until the end of 2025, Polymarket was operating at a loss, with zero fees, relying on free services to attract users. It wasn't until February this year that they officially introduced Taker Fee dynamic rates in the sports market. In the first week after charging, Polymarket's fee revenue exceeded $1 million. According to DefiLlama, Polymarket earned $3.18 million in the past 30 days, and its revenue curve only started to rise significantly from January this year.

Notably, the daily settlement market may become a future revenue source for Polymarket. High-frequency, short-cycle markets generate more trading occurrences, and similar to memes, users in this type of market tend to be less sensitive to fees.

Comparing the two: Kalshi's fee model is validated but relies heavily on the sports season. Polymarket's fee system is just getting started; while its annual revenue is far less than even a fraction of Kalshi’s, it signals that Polymarket's phase of exchanging zero fees for liquidity has passed, and they are now set to seriously conduct business.

2.3 User Profiles: Licensed Elites vs. Global Retail Investors

The user structure of both platforms is largely shaped by the regulatory environment.

Kalshi holds a CFTC license, allowing it to legally serve U.S. users, with its business scope primarily focusing on the domestic market.

Polymarket returned to the U.S. market at the end of 2025 by acquiring QCEX. For the previous few years, it was mainly active overseas. This "exile period" actually helped it build a broader international user base.

The differences in user base are also evident in their revenue structures.

89% of Kalshi's revenue comes from the sports market. User behavior closely resembles traditional sports betting: high trading frequency, relatively small individual amounts, and activity fluctuating with the season. User numbers surge at the NFL kickoff, then trading volume significantly drops after the season ends, displaying strong seasonality.

Polymarket's structure is vastly different. Political and macro markets occupy a core position, attracting a number of institutional-level traders to hedge macro risks here. The individual betting amounts are significantly higher. During the 2024 U.S. elections, a French trader placed a single bet of over $50 million, ultimately profiting $85 million. Such sizes are nearly unseen in the sports betting market.

2.4 Channel Moat: Distribution Agents vs. Developer Ecosystem

At the end of 2025, both Robinhood and Coinbase launched prediction market features on their platforms, partnering exclusively with Kalshi. Not only brokerage firms are onboard; sports platforms like PrizePicks and Underdog are also directing existing sports betting users to Kalshi. In December, Kalshi partnered with Coinbase, Robinhood, and Crypto.com to establish the prediction market alliance.

The logic is straightforward. Kalshi holds the designated contract market license issued by the CFTC. For licensed financial institutions, integrating into their system is akin to connecting with a traditional futures exchange, with clear procedures, low compliance costs, and manageable risks.

Polymarket's direction is entirely different. They are not pursuing channel distribution; rather, they seem to be building a foundational infrastructure for others to develop products around.

This strategy was most evident in a recent acquisition: Polymarket bought Dome, a project from the YC Fall 2025 batch. Dome provides prediction market APIs, allowing developers to integrate data and liquidity from multiple platforms, including Polymarket and Kalshi, with just one code implementation.

Currently, with the rise of Vibe Coding, developers can directly utilize Dome's APIs to create trading bots, data dashboards, and embedded market components. AI Agents can also execute prediction trading strategies through this API.

When looking at the two routes together, the difference is clear. Kalshi is expanding its channels, relying on partners to bring users and trading volume. Polymarket is laying down the groundwork, hoping developers will organically create applications on top of it. One path leans towards commercial network expansion, while the other bets on spontaneous formation of an ecosystem. Once the foundational layer achieves network effects, it will be difficult for newcomers to replicate.

2.5 Marketing Strategies: Brand Exposure vs. Community Viral Growth

Both companies' marketing strategies align closely with their user structures.

Kalshi focuses on brand exposure with a very traditional and direct approach. During the New York City mayoral election, they placed real-time odds advertisements in Times Square, Penn Station, and on subway trains, bringing prediction probabilities directly to street screens. When the NBA Finals arrived, Kalshi used AI tools to create a television commercial costing $2,000 in just two days, airing during prime time and garnering over 3 million views on X.

Additionally, through collaborations with CNN and CNBC, Kalshi's data appeared directly on news live broadcasts. For ordinary viewers, this serves as official endorsement, naturally increasing trust.

Polymarket's approach is entirely different, leaning more towards community self-propagation.

They have designed a promotion mechanism with great detail. Users send out their exclusive links; every time someone clicks, the promoter earns $0.01. If the person deposits over $20, a $10 CPA reward is triggered.

Once clicks and trading volumes reach a certain scale, additional distribution rewards are given. The entire structure incentivizes promoters to continuously bring in new users, resembling the commission link practices found on meme trading platforms.

Furthermore, Polymarket is also deliberately cultivating its content ecosystem, supporting accounts like @BrosOnPM. These KOLs primarily serve builders and traders in the prediction market, producing daily content that helps developers connect with traffic and creating a self-recycling propagation within the community.

3. So, Who is the Ultimate Champion?

The previous section described what both companies look like right now, but the current landscape does not equal the future landscape. The prediction market is still in its early stages, with too many variables – regulatory uncertainties, the influx of competitors, and unverified business models. Rather than drawing a definitive conclusion, it's better to outline the crucial questions that truly determine victory and defeat.

Both are Expanding into Each Other's Territory

From both platforms' actions, it is evident that they have recognized their weaknesses and are starting to address them.

When Polymarket returned to the U.S. market, the first contracts launched were all related to sports. They later signed official partnerships with MLS, NHL, and the New York Rangers to endorse the sports market with these league brands. A platform that started with politics is now desperately trying to squeeze into the sports circle.

The editor suggests two big reasons for this:

• Political markets may temporarily not be favored by U.S. regulators, while sports markets are more readily accepted.

• To seize Kalshi's market in the U.S.

Kalshi isn't idle either. They have signed with CNN and CNBC to have their odds data featured in news live broadcast graphics. A platform starting with sports now wants to penetrate the political arena, attempting to build media-level credibility.

However, the risks between the two companies are not on the same scale. Polymarket has genuine trading volumes in both political and sports, while Kalshi's trading volumes are almost entirely rested on sports. This structural difference will become a troublesome issue when discussing regulatory risks later.

Is the Biggest Channel Partner Also the Most Dangerous Competitor?

Robinhood is one of Kalshi's most important retail distribution channels, contributing over half of its trading volume in 2025. Coinbase has also introduced prediction markets in all 50 states, similarly settling through Kalshi.

But both companies have made a nearly synchronized move:

• Robinhood partnered with Susquehanna to form a joint venture to acquire MIAXdx

• Coinbase acquired The Clearing Company

Both companies are building CFTC-qualified exchange infrastructure, expected to be operational in 2026. Once their infrastructure is built, they can choose to continue collaborating with Kalshi for revenue sharing or opt to capture those profits themselves. By then, they will already have user data, trading habits, and liquidity accumulations.

For Kalshi, this risk not only involves channel partners potentially leaving in the future but it has transformed into a specific threat with a timeline. Kalshi's channel moat is essentially a time-limited first-mover advantage.

Polymarket's Charging: A Key Step to Validate the Business Model

Polymarket exceeded $33.8 billion in trading volume in 2025, yet its revenue was close to zero. However, the $9 billion valuation ultimately needs revenue to support it, and 2026 is the time for realization.

Charging began with cryptocurrency markets, later extending to sports events on February 18, 2026. The rationale behind this choice is clear: both are daily settlement-type markets with high trading frequencies, relatively small individual amounts, and fast user turnover, with lower sensitivity to fees than the long cycles of political macro contracts. Charging here minimizes the impact on core liquidity.

But the risks are also apparent. The liquidity of the prediction markets is entirely provided by users, with no market makers backing it. Once professional traders feel the fee impacts their arbitrage space, pulling out can happen in a second.

Historically, many exchanges have faced rapidly deteriorating liquidity due to incorrect timing and extent of charging, falling into a downward spiral of decreasing liquidity → users leaving → even worse liquidity.

Currently, Polymarket relies on maker rebates to hedge this risk, returning a portion of the taker fees collected to the makers in an attempt to maintain order book depth.

Establishing stable revenue without driving away liquidity is a prerequisite for Polymarket's valuation logic to hold. The charging experiment has just begun, and the answers will only become clear by the end of 2026.

Conclusion: No Kings in This War, Only Winners of an Era

The prediction market industry is still young, and it's indeed too early to conclude who wins or loses. However, the outlines of both companies are gradually becoming clear.

Kalshi's strengths are evident: a compliant first-mover advantage, a mature retail channel, and an already proven revenue model. However, it also faces significant pressures. Sports revenue's high proportion, ongoing uncertainties regarding state-level regulations, and the impending window for Robinhood and Coinbase to build their exchanges are all concerns.

Polymarket's advantages are also distinct: it possesses the deepest global liquidity, with virtually no competitors in the political and macro sectors, and its developer ecosystem is beginning to scale. However, its business model is still in the validation stage; the effectiveness of its charging mechanism isn't expected to become apparent until the end of 2026.

The interesting aspect of this competition lies in the fact that the positions of both companies currently do not fully overlap. Kalshi is expanding its retail scale while Polymarket focuses more on information density and market depth. A true face-off will likely occur after Polymarket matures in the U.S. sports market and Kalshi enhances its capabilities in the political market.

Until then, the industry's space remains broad enough to accommodate the parallel development of both paths.

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