Sports-First Startups Invade Prediction Market: Is the Sports Betting Industry in Trouble?

The world of prediction markets is experiencing a massive boom in 2026, with new companies emerging daily to conquer this expanding domain. Observers are already talking about a potential trillion-dollar market by 2030, as projected by Bernstein. This influx attracts numerous startups aiming to redefine the playing field with innovative approaches.

ProphetX and 365Prediction are two of these promising companies. Their founders see immense market opportunities, despite the sector facing stiff competition and regulatory uncertainties. Unlike Kalshi and Polymarket, which currently dominate prediction markets and resemble financial markets, ProphetX and 365Prediction are focusing on sports-centric offerings to provide sports bettors with a more familiar environment.

Numbers and facts

Experts estimate that the total volume of prediction markets could grow to over 1 trillion USD by 2030, underscoring the immense growth potential. Currently, Kalshi and Polymarket hold the largest shares. However, startups see their chance in occupying a niche through specialized offerings. Dean Sisun, co-founder and CEO of ProphetX, which recently received approval as a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO) from the CFTC, emphasizes the enormous liquidity: “That’s a massive number. If we turn prediction markets on across all those assets, how much is gonna get turned over year over year? It’s gotta be in the trillions.”

ProphetX plans to have five or six partnerships live by football season. This B2B strategy aims to circumvent the high customer acquisition costs in the B2C market. Laila Mintas, founder and CEO of 365Prediction, whose DCM and DCO application is pending with the CFTC, criticizes the current design of many platforms:

“Most operators that I’m seeing look like order books. It’s a product built by traders for traders, and it’s not close to what I feel is a sports-engaging or fan-engaging experience.” - Laila Mintas, Founder & CEO of 365Prediction

She is convinced that a sports-focused, social approach will be key to success.

Background

The development is reminiscent of the early days of online sports betting in the US after the repeal of PASPA in 2018. Back then, numerous providers flooded the market, but only a few remained. Jason Tilchen, Senior Research Analyst at Canaccord Genuity, noted that prediction markets “really started to take off last year,” especially when sports contracts were introduced. DraftKings, for instance, is investing in its own prediction app. FanDuel and Fanatics are also moving into this segment.

Some analysts predict a bleak future for traditional sports betting operators. Mintas was very clear on this: “State by state sports betting is dead and will only be used by the local casino providers such as BetMGM and Caesars, while prediction market companies and regulation will take over the market in 2026.” Sisun even goes so far as to say that ProphetX aims to make sportsbooks obsolete. He highlights that prediction markets offer features such as limit orders, position editing, and unrestricted API usage, which are absent in sports betting. These more flexible options could increase their appeal to many users.

The regulatory landscape is complex. Michigan has banned Kalshi's sports event contracts. About 25 bills addressing prediction markets have been introduced in Congress. Robinhood, a financial service provider, had to withdraw its sports prediction markets in several US states, including New Jersey, Ohio, and Massachusetts, because they were classified by regulators as “unlicensed sports betting.” Despite these challenges, Mintas and Sisun welcome the need for robust regulations. Mintas stated that “that process ultimately creates clearer routes, greater consumer confidence, and a stronger foundation for institutional participation.”

Why it matters for German players

For German players, prediction markets as they are emerging in the US are not directly relevant. The German Interstate Treaty on Gambling 2021 (GlüStV 2021) strictly regulates the German market. Sports betting is allowed but subject to clear rules. Pure prediction markets in this format are currently not licensed in Germany and do not fall under the GlüStV 2021. Players should therefore refrain from unofficial or unlicensed offers, as this entails legal and financial risks. The focus of the Joint Gambling Authority of the Federal States (GGL) is on adherence to strict regulations. These include the deposit limit of 1,000 euros per month and the stake limit of 1 euro per spin for online slot machines. Safe play is only possible with providers on the GGL whitelist, which are regularly audited. LUGAS, the cross-state gambling supervision system, actively monitors these limits to ensure player protection. Offers attempting to circumvent these limits are not recommended. I always advise playing only with providers that hold a German license and thus comply with strict German requirements.

What it means for GGL-licensed casinos

For online casinos with a GGL license, the developments in the US prediction markets do not directly change anything. German online casinos are subject to the GlüStV 2021, which strictly distinguishes between different types of gambling. Sports betting is separately licensed and regulated. A hybrid form, such as that presented by the emerging US prediction markets, is not foreseen in the current German legal framework. GGL-licensed providers must adhere to existing requirements: this includes strict compliance with stake and deposit limits, as well as technical requirements such as connection to LUGAS. Any offerings that might emulate US prediction markets would be subject to a separate, detailed review by the GGL and would likely not be compatible with current licensing conditions. Adherence to regulatory stringency is crucial for the long-term success of German online casinos, whereas experiments with unregulated offerings on the German market can lead to license revocation.