Top prediction market platforms are preparing to add perpetual futures to their offerings just as state and federal authorities intensify legal battles over whether event-based crypto contracts are gambling or legitimate financial instruments. The push by Kalshi and Polymarket to introduce high-leverage, never-expiring derivatives could transform niche election and macro data wagering into round-the-clock trading—and determine whether these venues are regulated like derivatives markets or shut down as unlicensed casinos.

Technology Overview

Prediction markets have built their recent prominence on binary, event-driven contracts. Users buy “Yes” or “No” shares tied to discrete, real‑world outcomes—such as an election result, a policy decision, or a sports championship—and positions settle when the event is resolved. Activity historically spikes around major catalysts and then falls sharply once results are known. This cyclical participation pattern has constrained how often users trade and, by extension, the fees platforms can earn.

Perpetual futures alter that structure. These contracts do not expire and allow traders to maintain positions indefinitely so long as they continue to meet margin requirements. They frequently permit leverage as high as 50 times initial capital, drawing users who seek to magnify exposure and respond to small price moves. By preparing to list perpetuals, prediction-market operators are moving closer to the feature sets of centralized crypto exchanges and retail brokerages, repositioning themselves from episodic event hubs into full-time derivatives venues.

How It Works

In the event‑contract model, every market is defined by a question and a binary payoff. Liquidity and participation cluster around news cycles, and contracts expire automatically upon resolution. With perpetual futures, the instrument persists. Traders can hold long or short exposure without the stop‑start rhythm of event schedules, provided they maintain required collateral. This makes it possible to convert occasional bettors into daily, high‑frequency participants, broadening the addressable user base beyond people arriving solely for headline events.

Kalshi has openly stated its intention to enter the perpetuals arena. Polymarket’s roadmap remains more guarded, including which assets it may support and whether access will be restricted for U.S. customers. Together, these moves signal an ambition to complement—or even replace—siloed event markets with a derivatives layer designed for continuous engagement and more durable liquidity.

Industry Impact

The commercial logic is shaped by market structure. Spot crypto trading cooled from its prior cycle peaks, totaling $18.6 trillion last year. Over the same period, crypto perpetual futures generated $61.7 trillion in global volume, according to data cited from CryptoQuant. That disparity helps explain why platforms with event roots are prioritizing instruments that enable short exposure, hedging, and leverage during quieter periods.

Prediction markets have attracted significant capital in their own right, with all‑time notional volume exceeding $150 billion. Even so, episodic settlement cannot match the around‑the‑clock fee generation of a derivatives order book. At the same time, the boundary lines in fintech are collapsing. Centralized platforms like Robinhood, Coinbase, and Gemini have embraced event‑based offerings, further blurring distinctions between retail brokerage, crypto exchange, and prediction venue.

Competitive pressure is pushing from the other direction as well. Offshore decentralized exchange Hyperliquid, a major force in perpetual futures, has announced plans to list event contracts, encroaching on the prediction segment. That has sharpened debate over who holds the structural advantage. Some argue decentralized derivatives exchanges can more easily bolt on event markets than event platforms can build robust, high‑throughput futures engines. Others counter that technology is not the bottleneck; acquiring mainstream users and bootstrapping liquidity are the harder tasks.

Industry voices have framed the contest in different terms. Mo Shaikh of the Aptos blockchain emphasized that value accrues to underlying infrastructure layers—clearing, liquidity, identity, settlement, and data—even if frontends remain fragmented. Kyle Samani of Forward Industries argued that prediction venues face tougher user acquisition challenges and predicted that Kalshi’s perpetuals would perform strongly once launched.

Regulatory Crosswinds

The product shift is unfolding amid a widening legal clash over how these platforms are classified. State regulators are moving to label prediction venues as unlicensed casinos, disputing the view that event contracts are sophisticated financial tools. On April 21, New York Attorney General Letitia James filed sweeping lawsuits against Coinbase and Gemini, seeking $3.4 billion in penalties and restitution and alleging that offering prediction markets to retail users, including minors, violates state consumer protection and tax laws. Citing research from the National Institutes of Health and the American Psychological Association, the filing linked early exposure to mobile betting and gambling disorders with heightened mental health and financial risks. “Gambling by another name is still gambling,” James said, asserting that state law applies to these activities.

The industry rejects the gambling label, contending that event contracts serve as instruments for hedging geopolitical and economic risks. The Commodity Futures Trading Commission has backed that interpretation by asserting exclusive federal jurisdiction over the sector and has filed lawsuits against authorities in Arizona, Connecticut, and Illinois to block state‑level interference. A federal appeals court in Philadelphia ruled against New Jersey gaming regulators earlier this year, determining that the CFTC held sole regulatory authority over Kalshi’s election and sports‑related contracts. Together, these cases highlight a fractured perimeter that platforms must navigate as they roll out new derivatives.

Data Value and Market Positioning

Moving into perpetual futures could tighten the link between prediction markets and mainstream market infrastructure. Traditional finance is paying attention: the Intercontinental Exchange, parent of the New York Stock Exchange, invested $2 billion in Polymarket, signaling institutional interest in event‑priced venues. Supporters point to both forecasting accuracy and tradability. In high‑liquidity markets, Brier scores—a standard measure of probabilistic accuracy—have fallen as low as 0.0247 shortly before resolution, suggesting that pricing errors narrow as participation and capital deepen. Industry estimates indicate that roughly 10% of proprietary trading firms already participate in event contracts, using them in part to hedge macro and policy exposure.

This convergence of data value and trading activity explains the rush to diversify product suites. Rob Hadick of Dragonfly put the commercial imperative plainly: owning the customer relationship is key to longevity as finance broadens into more event‑driven and derivatives‑heavy terrain.

Strategic Disagreements

Not everyone sees perpetuals as the inevitable next step. Alex Momot of Peanut Trade argued that the current pivot resembles a defensive reaction to intensifying legal pressure rather than a durable strategy. He suggested that some operators are inching toward the crypto‑exchange model because the rules appear clearer there and the risk of being categorized as gambling is lower. Even so, he cautioned that a bigger challenge may be liquidity: without deeper pools, use cases like hedging and insurance against real‑world event risk remain hard to scale. In his view, index‑style products, event aggregation, and pooled liquidity across markets could offer stronger long‑term foundations by making prediction venues resemble traditional derivatives or synthetic exposures.

Dyma Budorin of CORE3 warned that the merging of prediction and derivatives behaviors is likely to draw heightened scrutiny if risk controls do not keep pace. If platforms continue to converge on perp‑like activity without commensurate safeguards, he said, regulators will treat them as derivatives operators outside the rules—attention that historically does not end quietly.

Future Implications

The New York litigation ensures that jurisdictional questions will remain central to the sector’s future, potentially drawing in the U.S. Supreme Court or prompting Congress to craft a clearer statutory framework. For now, operators appear inclined to move first and seek clarity later. Each new perpetual listing is both a play for continuous trading fees and an invitation to further enforcement. Whether more states follow New York’s lead—or courts and Congress affirm the CFTC’s claim to sole oversight—will help determine if prediction markets evolve into integrated derivatives platforms or are forced back into tightly constrained, event‑only niches.

As Kalshi and Polymarket prepare their next moves, the market is deciding whether perpetual futures become the connective tissue that keeps users engaged between news cycles—or a costly detour from the slower work of building resilient, shared liquidity. The answer will likely hinge on the same two forces driving today’s race: the mechanics of perpetual exposure and the regulatory definition of what, exactly, these markets are allowed to be.