Polymarket just asked the CFTC for permission to bring its main exchange back to American traders. On the same day, it ripped out its entire trading infrastructure and rebuilt it from scratch. Kalshi posted $3.91 billion in weekly volume, its highest ever. The Senate introduced a bipartisan resolution to ban all lawmakers from prediction markets. And Finland is the betting favorite to win Eurovision. Prediction markets are simultaneously becoming more legitimate and more weird. Here's what you need to know.
This is the biggest story in prediction markets this year, and it happened almost quietly.
On April 28, Polymarket began formal discussions with the CFTC to lift the ban that has kept its main exchange off-limits to American users since 2022. That year, the CFTC fined Polymarket $1.4 million for operating without proper registration. Polymarket settled, pulled out of the US, and spent the next four years building the largest prediction market in the world -- from outside America's borders.
The timing isn't accidental. Last July, Polymarket acquired QCEX, a CFTC-licensed exchange, for $112 million. That gave them a regulatory vehicle. Now they want to use it.
If the CFTC approves, the effect is simple: American retail liquidity floods back into Polymarket. The US has more prediction market traders than any other country. Polymarket has been serving them through a wink-and-nod VPN culture, but institutional capital and mainstream retail won't touch an exchange where US participation is technically prohibited. Remove that prohibition, and market depth on major events could double or triple.
Our take: Approval isn't guaranteed, but the CFTC under its current leadership has been permissive toward prediction market innovation. The real question is timing. If approval comes before the 2026 midterms, Polymarket becomes the de facto election market for American traders. If it drags past November, Kalshi keeps its domestic monopoly for another cycle.
On the same day Polymarket filed with the CFTC, it executed a complete infrastructure upgrade. New smart contracts. A rewritten order book engine. A new collateral token called Polymarket USD (pUSD), backed 1:1 by USDC on Polygon.
Trading paused for roughly an hour during the cutover. A $1 million liquidity incentive program accompanied the launch to prevent market-making gaps during the transition.
This is the kind of thing that gets zero media coverage but matters enormously. The old infrastructure was built when Polymarket processed a few hundred thousand dollars a day. Now it handles hundreds of millions. Upgrading the engine while the plane is in the air, with a CFTC application pending, tells you Polymarket is confident enough in its regulatory trajectory to invest heavily in the foundation.
While Polymarket plans its American comeback, Kalshi is already there -- and crushing it.
Kalshi posted $3.91 billion in weekly volume for the week of April 20-28, its highest ever. That's nearly double Polymarket's weekly volume for the same period. Sports parlays drove more than 85% of the total.
The sports betting angle is worth understanding. Kalshi isn't competing with Polymarket for political prediction nerds. It's competing with DraftKings and FanDuel for sports bettors. The prediction market wrapper lets Kalshi offer sports parlays with lower vig (house edge) than traditional sportsbooks, and the CFTC regulatory umbrella gives it a structural advantage over state-by-state gambling licenses.
This is probably where prediction market volume lives long-term. Political events are episodic. Sports are daily. The intellectual purity of "will the Fed cut rates" markets is nice, but $3.91 billion in a week comes from people betting on whether the Lakers cover the spread.
Our take: Kalshi's volume is real but somewhat misleading as a prediction market metric. When 85% of volume is sports parlays, you're a sportsbook with better regulation, not a forecasting engine. That's not a criticism -- it's a viable business. But it means Kalshi and Polymarket are increasingly serving different markets despite both being called "prediction market platforms."
Sen. Bernie Moreno (R-OH) introduced a bipartisan resolution on April 24 that would ban all members of Congress from trading on prediction markets entirely. Not just political events. All prediction markets.
This is separate from -- and broader than -- the PREDICT Act introduced earlier, which focused specifically on politicians betting on their own races. The Moreno resolution goes further: a senator couldn't bet on whether it'll rain in July.
The resolution has five co-sponsors from both parties. In a Congress that agrees on almost nothing, "lawmakers shouldn't gamble on events they can influence" turns out to be an easy consensus.
Combine this with the earlier PREDICT Act and Sen. Merkley's "End Prediction Market Corruption Act," and you have three separate legislative tracks all converging on the same conclusion: people with access to non-public government information should not be trading on prediction markets.
Our take: Paradoxically bullish for the industry. Every one of these bills implicitly accepts that prediction markets are legitimate financial instruments worth regulating. You don't ban members of Congress from doing something that's about to be shut down. You ban them from doing something that's about to be mainstream. The insider trading controls are the price of legitimacy, and it's a price the industry should be eager to pay.
The Eurovision Song Contest is May 16 in Vienna, and the prediction markets are telling an interesting story.
| Country | Polymarket Odds | Bookmaker Odds (OLBG) |
|---|---|---|
| Finland | 35.3% | 6/4 (~40%) |
| Denmark | 13.4% | 14/1 (~7%) |
| Greece | 11.6% | 12/1 (~8%) |
| France | 10.1% | 10/1 (~9%) |
| Australia | 6.3% | 14/1 (~7%) |
| Israel | 5.1% | 8/1 (~11%) |
Finland is the clear favorite on both Polymarket and the bookmakers. But the interesting action is in the discrepancies. Denmark is trading at 13.4% on Polymarket but only 7% at the bookmakers -- nearly double. Israel is the reverse: 5.1% on Polymarket versus 11% at the bookmakers.
These gaps are exactly the kind of edge that prediction market traders look for. When the market and the bookmakers disagree by 2x, one of them is wrong. Eurovision is a televote + jury split, and historically, bookmaker odds have been the better predictor of the overall winner. If you trust the bookies, Denmark is overpriced on Polymarket and Israel is underpriced.
Our take: We're not making a Eurovision call -- we know our lane, and it's geopolitics, not pop music. But the Denmark/Israel discrepancy is worth watching as a case study in prediction market efficiency. When the same event is priced differently on two platforms, someone is leaving money on the table.
The Hormuz April normalization market resolves tomorrow, April 30. It's at 0.4%. Our call in Issue #1 -- when it was trading at 38% -- was that April normalization was a NO. Fair price: 5-10%.
It's at 0.4%. We were right. The $500 position is worth $803, a 61% return in nine days.
The bigger story is May. Hormuz May normalization has drifted down to 35.5%, which is now within our original fair value estimate of 40-50%. We bought NO at 69.5% (YES price at open). That position is up 111% and we're holding.
The ground truth hasn't changed. Peace talks remain deadlocked. Iran's latest proposal -- reopen Hormuz, defer nuclear talks -- was rejected by the US. The dual blockade continues: only a handful of ships transit the Strait daily, versus 140 before the crisis. UAE announced it will leave OPEC, adding geopolitical complexity. German Chancellor Merz publicly criticized the US for lacking a strategy.
May normalization at 35.5% implies the market sees a meaningful chance of resolution in the next 32 days. We don't. The positions for negotiation are too far apart, and neither side has shown willingness to make the first major concession.
Portfolio update: Starting capital $1,000. Current value $1,637 (+63.7%). April NO: +61% (resolves tomorrow). May NO: +111% (holding). Cash reserve: $200. This is our best performance since launch.
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