Prediction market operators are rolling out their own trading infrastructure, a rapid change that could trigger a wave of takeovers across cryptocurrency platforms, bookmakers, brokerages and independent exchanges, according to Bernstein analysts.
In Monday’s research report, Bernstein said the industry is undergoing “operational consolidation” with major platforms moving to control more of the forecasting market.
“Every significant consumer platform has connected the front and back of the prediction market stack,” they said. This includes distribution, brokerage, exchange and settlement. This convergence placed companies that historically operated in separate industries into a single competitive landscape.
Bernstein pointed to Robinhood rout prime World Cup contracts through Rothery, the exchange he co-owns with Susquehanna, and DraftKings launching DKeX and volume transfer from CME and Crypto.com infrastructure. The company also cited the Coinbase report acquisition The Clearing Company and its introduction of event contracts as evidence that consumer platforms are seeking to control more of the prediction market.
Owning the infrastructure allows platforms to retain fees that previously flowed to third-party partners, making acquisitions a faster route to distribution, licensing, or filling in missing parts of the stack. However, the same convergence that strengthens the case for consolidation may also boost state and federal control by further blurring the regulatory line between financial trading and gambling.
Timeline of acquisitions. Source: Bernstein
Regulatory conflict may limit consolidation
Bernstein said regulatory scrutiny remains one of the main barriers to greater integration across the entire forecasting market sector.
While connecting crypto platforms with brokerages, bookmakers and exchanges could improve margins and reduce reliance on third-party partners, Bernstein said such deals could draw antitrust scrutiny and deepen disputes over whether contracts for sporting events should be regulated as derivatives or gambling products.
Related: About 60% of Polymarket’s World Cup players are first-time cryptocurrency users
This could further escalate a jurisdictional conflict that is already ongoing in several states. Minnesota passed what the Commodity Futures Trading Commission (CFTC) described as the first outright ban on prediction markets, while Illinois passed legislation requiring platforms to obtain a state license before offering contracts for sporting events.
Valuation of online bookmakers compared to leading prediction markets.
Source: Bernstein.
Kalshi challenged the restrictions imposed by both states, arguing that federally regulated exchanges were subject to the exclusive authority of the CFTC.
The growing resistance suggests consolidation may make commercial sense but remains complex to achieve until regulators and courts determine where federal derivatives oversight ends and state gaming authorities begin.
