Author: Changan , Biteye Content Team
A few days ago, many KOLs on X suddenly discovered that the badges symbolizing their collaboration with Kalshi had disappeared from their accounts.
Prediction News reported on the incident, and then a hilarious screenshot surfaced: Polymarket's official account quietly liked the report.
The long-standing battle between Polymarket and Kalshi suggests the market is entering a true duopoly era.
On one side is Polymarket, a crypto-native platform, and on the other is Kalshi, a compliant financial system.
The essence of this competition is not which company is stronger, but whether the future pricing power of information belongs to Crypto or Wall Street.
Therefore, this analysis is worthwhile. 👇
I. A Chronicle of Business Warfare: From Regulatory Maneuvering to Offline Showdowns
Over the past year, the competition between the two companies has escalated from products to a multi-faceted battle involving channels, regulation, and public opinion.
1. Valuation Race: A Capital Counterattack in 41 Days
On October 7, 2025, Polymarket announced that it had received a $2 billion strategic investment from ICE, valuing the company at $9 billion.
Three days later, Kalshi announced the completion of a $300 million Series D funding round, valuing the company at $5 billion. The timing was so precise that it was hard to believe it was just a coincidence.
But Polymarket clearly has no intention of stopping. On October 23, Bloomberg reported that Polymarket was in talks with investors to raise a new round of funding, aiming for a valuation of $15 billion.
On November 20th, Kalshi responded: it had completed a $1 billion funding round, jumping its valuation to $11 billion, led by Paradigm. This not only surpassed Polymarket's previous valuation of $9 billion, but also rapidly approached its $15 billion funding target. And this came just 41 days after its previous Series D funding round was announced.
2. Cultural Breakthrough: The Battle for Traffic
On September 24, 2025, a trailer for the fifth episode of the 27th season of South Park, titled "Conflict of Interest," was released, which will feature content related to the prediction market.
As soon as the news broke, both platforms realized an opportunity had arrived. This marked the first time the prediction market had entered the mainstream consciousness. Whoever could convert this attention into trading volume first would reap a larger share of the profits from this breakthrough.
Kalshi and Polymarket quickly launched a batch of markets highly relevant to the plot, allowing users to bet on the plot's direction on their platforms immediately.
On the day the series aired, the Kalshi team collectively changed their profile pictures to South Park cartoon style images, flooding social media with posts and firmly embedding the brand into the day's trending topics. These two platforms didn't miss any marketing opportunity to turn trending topics into sales.
3. Ecological Subsidiary Accounts and the Bidding War
As the platform’s user base expanded rapidly, Polymarket and Kalshi launched their respective affiliate account programs almost simultaneously in the second half of last year, starting to badge KOLs, traders and ecosystem projects on X.
Polymarket moved even faster: the Trader badge certifies active traders, encouraging them to share strategies and position views on X, driving traffic to the platform. The Builder badge targets ecosystem projects, attracting developers to build applications on the platform and gain more exposure through official endorsement.
At the same time, Polymarket also launched a $1 million Builders incentive program, directly using real money to bring developers into the ecosystem.
Kalshi quickly followed suit, launching a broader badge system that covers multiple areas such as sports, culture, and trader certifications, replicating this model in the sports and mass market sectors where it has a greater advantage.
These days, traders on Twitter who predict the market either wear the Polymarket badge or the Kalshi badge.
4. Physical Marketing Showdown: The Manhattan Free Goods War
On February 2, 2026, Kalshi announced on X that he would be providing free food to users at the Westside Market supermarket from 12 p.m. to 3 p.m. the following day, with a maximum of $50 per person. As soon as the news broke, long lines quickly formed, with students and low-income people flocking to the store, creating a very popular scene.
The following day, February 3, Polymarket quickly responded, announcing the opening of its first free food pop-up store in New York City, open to the public for five consecutive days. The rules were simple: customers could fill a handbag and take it with them, with no strings attached. At the same time, Polymarket also announced a $1 million donation to Food Bank for New York City to alleviate the city's food safety problems.
The two events took place one after the other, creating a tense atmosphere.
5. An arms race for regulatory and political resources
Both sides' lobbying machines in Washington have never stopped, and they have both brought in Donald Trump Jr. to endorse them, both to leverage Republican-affiliated regulatory resources and to build political capital in the public sphere.
But beneath the surface, the real battleground exists in two dimensions: the loopholes in the CFTC's rules and the injunction battles between state courts.
While Polymarket evaded direct regulatory scrutiny through its offshore structure, it quietly paved its way into the US market by acquiring QCEX; Kalshi, on the other hand, chose to confront the issue head-on, holding the CFTC's first prediction market license, but this also made it a prime target for state prosecutors - at least four states have filed lawsuits against it, accusing it of illegally accepting bets from local users.
These seemingly simple business battles are no longer just about product competition, but a full-scale war of political capital and traffic monopoly.
II. Hardcore Comparison: Five Dimensions to Analyze the Two Giants
2.1 Comparison of Transaction Data: The Misalignment Between Political Cycles and Sports Calendars
As of February 2026, the total Notional Volume of the entire forecasting market was $127.5 billion, the Actual Volume was $69.9 billion, the number of unique users was 2.49 million, and the open interest exceeded $1 billion.
Polymarket and Kalshi together account for approximately 79% of the market share. Polymarket ranks first with a Notional Volume of $56.07 billion, followed closely by Kalshi at $44.71 billion. In terms of Open Interest, Kalshi at $474.01 million slightly leads Polymarket at $409.67 million, and the two together account for over 85% of the total market share of Open Interest.
In terms of trends, the growth of both companies is highly dependent on event-driven factors. Polymarket's OI peaked at $500m around the time of the October 2024 election, before falling back; Kalshi's OI, on the other hand, surged from the start of the 2025 NFL season, reaching an all-time high at the end of 2025.
Both platforms are experiencing growth, but the driving factors differ. One is driven by political cycles, while the other is by the sports calendar.
(Data source: Dune, as of 11:00 AM on February 26)
2.2 Revenue Comparison: Validated Dynamic Rates vs. Startup Taker Fee
The two platforms have fundamentally different pricing logics.
Kalshi
A probability-weighted dynamic fee structure is used: transaction fees are charged based on the contract price, and the fee rate changes with the contract price, peaking at 50 (i.e., 50/50 probability) and decreasing towards 0 or 99. For example, for a $100 transaction, the maximum fee is approximately $1.74, and the effective fee rate is approximately 1.2%.
Revenue was $24 million in 2024 and $260 million in 2025, representing a year-on-year increase of 994%. However, revenue is highly concentrated in the sports season: the NFL season (September-November) contributed $138 million in a single quarter, with December alone reaching a record high of $63.5 million. Off-season revenue drops significantly, showing a clear seasonality.
Polymarket
Looking back at Polymarket, they took the exact opposite path. Until the end of 2025, Polymarket operated at a loss, offering zero fees and acquiring users through free services. It wasn't until February of this year that they officially launched the Taker Fee dynamic rate in the sports marketplace. In the first week after implementing the fee, Polymarket's fee revenue exceeded $1 million. DefiLlama data shows that Polymarket's revenue in the past 30 days was $3.18 million, with its revenue curve only truly starting to rise in January of this year.
It's worth noting that the daily settlement market may become a future revenue source for Polymarket. High-frequency, short-cycle markets generate more trading activity, and similar to Meme, users in this type of market are less sensitive to fees.
Comparing the two: Kalshi's fee model is proven, but it relies on the sports season. Polymarket's fee model is just starting out, and although its annual revenue is only a fraction of Kalshi's, it means that Polymarket's phase of trading liquidity for zero fees is over, and they are now going to start doing business seriously.
2.3 User Profile: Licensed Elites vs. Global Retail Investors
The user structure of both platforms is largely shaped by the regulatory environment.
Kalshi holds a CFTC license, which allows it to legally serve users in the United States, and its business is mainly concentrated in the US domestic market.
Polymarket returned to the US market in late 2025 through the acquisition of QCEX. In the years prior, it had primarily operated overseas. This period of "exile" actually helped it build a broader international user base.
The differences between the two groups of users can also be seen from their income structure.
Kalshi derives 89% of its revenue from the sports betting market. User behavior closely resembles traditional sports betting: high transaction frequency, relatively small individual transaction amounts, and activity levels fluctuate with the season. User growth is rapid at the start of the NFL season, followed by a significant drop in transaction volume after the season ends, exhibiting a strong seasonal pattern.
Polymarket's structure is distinctly different. Political and macroeconomic markets occupy a central position, attracting numerous institutional traders who hedge macroeconomic risks. Individual bets are significantly larger. During the 2024 US election, a French trader placed a single bet exceeding $50 million, ultimately profiting $85 million. Such a scale is almost unheard of in the sports betting market.
2.4 Channel Moat: Distribution Agents vs. Developer Ecosystem
By the end of 2025, both Robinhood and Coinbase had launched prediction market features on their platforms, partnering with Kalshi. Beyond brokerages, sports betting platforms like PrizePicks and Underdog were also directing their existing sports betting users directly to Kalshi. In December, Kalshi also formed a prediction market alliance with Coinbase, Robinhood, and Crypto.com.
The logic is quite straightforward. Kalshi holds a designated contract market license issued by the CFTC. For licensed financial institutions, connecting to its system is like connecting to a traditional futures exchange: the process is clear, compliance costs are low, and risks are controllable.
Polymarket took a completely different approach. Instead of focusing on channel distribution, they built a foundational infrastructure, hoping others would develop products around it.
The most obvious step in this strategy was the acquisition five days ago: Polymarket acquired Dome, a project from Y Combinator's Fall 2025 roundup. Dome provides prediction market APIs, allowing developers to access data and liquidity from multiple platforms, including Polymarket and Kalshi, with a single code entry.
Vibe Coding is currently very popular, allowing developers to directly call Dome's API to create trading bots, data dashboards, and embedded market components. AI agents can also automatically execute predictive trading strategies through this API.
Looking at the two paths side-by-side makes it clear. Kalshi is building distribution channels, relying on partners to bring in users and transaction volume. Polymarket is building the underlying infrastructure, hoping developers will grow applications on top of it. One path leans more towards expanding a business network, while the other bets on the spontaneous formation of an ecosystem. Once the underlying infrastructure truly develops network effects, it will be very difficult for latecomers to replicate it.
2.5 Marketing Strategy: Brand Exposure vs. Community Growth
The marketing strategies of the two companies are actually highly consistent with their respective 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 ads in Times Square, Pennsylvania Station, and subway trains, displaying predicted probabilities directly on large street screens. For the NBA Finals, Kalshi used AI tools to create a $2,000 TV ad in two days, airing it during prime time and garnering over 3 million views on X.
Furthermore, with partnerships with CNN and CNBC, Kalshi's data can appear directly in live news broadcasts. For ordinary viewers, this is tantamount to official endorsement, naturally increasing their trust in the company.
Polymarket's approach is completely different, leaning more towards community-driven dissemination.
They designed their referral mechanism very meticulously. Users share their exclusive links, and for every click, the referrer earns $0.01. If the recipient deposits more than $20, a $10 CPA reward is triggered.
Once clicks and transaction volume reach a certain scale, additional rewards are distributed. This structure incentivizes promoters to continuously attract new users, much like the rebate link system on the Meme trading platform.
In addition, Polymarket is also deliberately cultivating its own content ecosystem, such as supporting accounts like @BrosOnPM. These KOLs mainly serve prediction market builders and traders, producing content daily, helping developers connect with traffic, and creating a self-sustaining cycle of dissemination within the community.
III. So, who is the ultimate champion?
The data in the previous paragraph described the current state of the two companies, but the current landscape does not equate to the future one. The market for prediction is still in its early stages, with too many variables—regulatory uncertainties, the influx of competitors, and unproven business models. Rather than offering a definitive conclusion, it's more effective to identify the key issues that will truly determine victory or defeat.
Both sides are expanding into each other's territory.
Judging from the actions of the two platforms, both have realized their shortcomings and have begun to make up for them.
When Polymarket returned to the US market, its first batch of contracts were all in sports. They later signed official partnerships with MLS, NHL, and the New York Rangers, using these league brands to endorse the sports market. A platform that rose to prominence through politics is now desperately trying to squeeze into the sports arena.
The editor believes there are two main reasons:
Political markets may not be as favored by US regulators for the time being, while sports markets are more readily accepted.
To seize Kalshi's market share in the United States.
Kalshi's side hasn't been idle either. They've signed contracts with CNN and CNBC to have their odds data appear on the screen graphics during live news broadcasts. This platform, which started in sports, is now trying to get into the political arena, attempting to build media-level credibility.
However, the risks of the two companies are not on the same level. Polymarket has real trading volume in both politics and sports, while Kalshi has almost all of its trading volume in sports. This structural difference will become a very troublesome issue when we discuss regulatory risks later.
The biggest channel partner, or the most dangerous competitor?
Robinhood is one of Kalshi's most important retail distribution channels, contributing more than half of its transaction volume in 2025. Coinbase has also launched prediction markets in all 50 states, also cleared through Kalshi.
However, both companies made the same move almost simultaneously:
Robinhood and Susquehanna form a joint venture to acquire MIAXdx
Coinbase acquires The Clearing Company
Both companies are building their own CFTC-licensed exchange infrastructure, expected to be operational in 2026. Once completed, they can choose to continue their profit-sharing partnership with Kalshi, or keep the profits for themselves. By then, they will have accumulated user data, trading habits, and liquidity.
For Kalshi, this is not just the risk that channel partners might leave one day, but a concrete threat with a set timeline. Kalshi's channel moat is essentially a first-mover advantage with a limited lifespan.
Polymarket Fees: A Key Step in Validating a Business Model
Polymarket's total trading volume exceeded $33.8 billion in 2025, but its revenue was close to zero. However, the $9 billion valuation ultimately needs to be supported by revenue, and 2026 will be the time to realize that valuation.
The fee system was piloted in the cryptocurrency market and then expanded to sporting events on February 18, 2026. The logic behind this choice is clear: both are daily settlement markets with high transaction frequency, relatively small transaction amounts, and rapid user turnover, making them less sensitive to fees than long-term political and macroeconomic contracts. Charging fees here first minimizes the impact on core liquidity.
However, the risks are also apparent. The liquidity of the prediction market is entirely provided by users, with no market maker to back it up. Once professional traders feel that the fees are affecting their arbitrage opportunities, they can withdraw in a second.
Historically, many exchanges have suffered from a rapid deterioration in liquidity and a vicious cycle of declining liquidity → user exodus → even worse liquidity due to improper timing and amount of fees.
Polymarket currently uses maker rebates to hedge this risk, returning a portion of the fees collected by the taker to the order book holder in an attempt to maintain order book depth.
The ability to establish stable revenue without disrupting liquidity is a prerequisite for Polymarket's valuation logic to hold true. The fee-based experiment has only just begun, and the answer won't be clear until the end of 2026.
Conclusion: There are no kings in a war, only winners of the times.
The prediction market industry is still very young, and it's too early to draw conclusions about who will win or lose. However, the outlines of the two companies are gradually becoming clearer.
Kalshi's strengths are clear: a first-mover advantage in compliance, mature retail channels, and a proven revenue model. However, it also faces considerable pressure. Sports revenue accounts for a relatively high percentage, state-level regulation remains uncertain, and the window for Robinhood and Coinbase to build their own exchanges is closing.
Polymarket's advantages are equally clear: it boasts the deepest global liquidity, virtually no competitors in the political and macroeconomic arena, and its developer ecosystem is also taking shape. However, its business model is still in the validation stage, and whether its fee structure can truly work remains to be seen until the end of 2026.
What's interesting about this competition is that the two companies don't entirely overlap in their current positions. Kalshi is expanding its retail scale, while Polymarket focuses more on information density and market depth. A true head-on clash will likely occur after Polymarket's US sports market matures and Kalshi's capabilities in the political market improve.
Before that, the industry had enough room to accommodate the parallel development of two paths.
