Evercore Says Only 8% of Prediction Markets Forecast Well as Most Stay Thinly Traded
Updated
Updated · CNBC · May 25
Evercore Says Only 8% of Prediction Markets Forecast Well as Most Stay Thinly Traded
1 articles · Updated · CNBC · May 25
Evercore ISI said prediction markets are most useful when contracts have high volume, short time horizons and simple questions with clear resolution rules, because those features produced more reliable probabilities in its review.
Only about 8% of events on Kalshi and Polymarket exceed $1 million in volume, while nearly 60% of live markets have under $1,000 traded and just 5.3% top $100,000.
Thin trading can let a large bettor distort prices, and ambiguous contracts such as whether a ceasefire will hold can end up tracking wording disputes rather than the underlying event.
Evercore said prediction markets can still outperform polls or expert forecasts during chaotic macro events by rapidly absorbing headlines and penalizing bad calls, though prices reflect crowd belief rather than a definitive forecast.
The firm said the sector's rise was fueled by institutional attention, better infrastructure and the 2024 CFTC approval of election-related contracts on Kalshi, with volume surging further in fall 2025.
With regulators and lawmakers now targeting prediction markets, can this billion-dollar industry be tamed without being destroyed?
As prediction markets boom, are corporations ready for the new insider trading risks created by their own employees?
Amidst legal battles between states and the CFTC, who will ultimately win the right to govern these controversial markets?