Gamblification of Markets

Priced Chance: The Financialisation of Wagering in Retail Markets

This post is concerned with the convergence of regulated betting and retail finance, and with the market mechanisms that have converted informal wagering into continuously priced contracts. We compare three instruments: event contracts on prediction markets, zero-day-to-expiry equity options, and the engagement features of commission-free brokerages. We propose that the three share one architecture. We then report the available evidence on scale and cost.

I. Scale

The growth of event contracts is recent and large. Combined monthly global trading volume on Kalshi and Polymarket rose from less than $5 billion in September 2025 to about $24 billion in April 2026, according to a Pew Research Center analysis; for comparison, legal US sportsbooks took in around $14 billion per month on average in 2025. By June 2026 the two platforms' combined monthly volume had reached $44.8 billion, according to The Block. The composition differs sharply by venue: sports contracts have made up roughly 80 per cent of Kalshi's volume since July 2024, against 39 per cent on Polymarket.

These figures require one qualification. Kalshi reports notional volume, counting every contract at its $1 face value regardless of the price actually paid, so the reported figure can exceed the cash that changes hands, and the two platforms are not measured on the same basis. The volumes are therefore best read as orders of magnitude.

Short-dated options show the same pattern inside regulated securities markets. Cboe reports that zero-days-to-expiration ("0DTE") volume rose 46.2 per cent year-to-date in the second quarter of 2026, to more than 20 million contracts a day. Cboe also estimates that retail investors account for 50 to 60 per cent of 0DTE activity, with these contracts representing around 60 per cent of all S&P 500 options volume. 

II. Mechanisms

We identify three mechanisms. The first is the "implied probability." An event contract is a binary claim valued between $0 and $1, and its price is meant to represent the likelihood of the outcome; a 40-cent contract implies a 40 per cent chance and pays $1 if the event occurs. That is, the wager is restated as a quote. 

The second is "continuous pricing." A fixed-odds bet is held until settlement. An exchange contract can be sold at any point before resolution, so the bettor holds a marked-to-market position with an exit. The same logic applies to a 0DTE option, which prices an intraday outcome and settles within a single session.

The third is mobile-first distribution. Kalshi's integration with Robinhood placed event contracts in front of a mainstream retail trading audience that never needed to hold crypto. Product design followed distribution. Combined, parlay-style bets now form the largest single slice of Kalshi's sports volume. The parlay is a sportsbook product. Its migration to a federally regulated exchange implies that the contract form, rather than the underlying activity, has changed. 

Brokerage interfaces supplied the behavioural layer. Massachusetts regulators alleged that Robinhood used digital confetti, scratch-off lottery-style tickets and stock awards for first-time traders, alongside push notifications and "most popular" lists that encouraged frequent trading. The firm agreed in January 2024 to pay a $7.5 million fine and overhaul its practices, although a company spokesperson rejected the premise that any part of the app had been gamified. 

III. What the Structure Obtains, and at What Cost

The exchange form obtains price transparency and liquidity at the cost of a clear regulatory boundary. A quoted probability is more legible than a bookmaker's odds, which embed an undisclosed margin. However, the same legibility allows a gambling product to be classified as a derivative. Some regulators have argued that sports event contracts amount to offering sports betting nationwide, in violation of state and local gambling rules. 

Continuous pricing obtains an exit option at the expense of settlement frequency. A weekly sports bet becomes a position that can be traded many times before kick-off, and a monthly option becomes one that expires by the close. The revenue consequences are measurable: Kalshi has reportedly earned approximately $850 million in fee revenue in 2026 alone. We do not observe how those fees are distributed across retail accounts.

Concluding Remarks

Taken as a whole, the evidence is consistent with a single transformation across three venues: chance is packaged as a binary or short-dated claim, priced continuously and delivered through the same retail application. Event-contract volume now exceeds sportsbook handle on the reported basis, and same-day options account for the majority of S&P 500 options trading. There are many questions this post does not address. We cannot measure whether event contracts substitute for sportsbook wagering or add to it, and no public data report the net returns of retail participants. Until those data exist, the classification question will be settled by regulators rather than by the evidence.

Written by Raj Shah and Atharv Gupta