Bernstein identifies Kalshi and Polymarket as potential acquisition targets amid rising M&A activity in the prediction market space.
In a recent analysis, Bernstein has identified Kalshi and Polymarket as likely targets for acquisition in the rapidly evolving prediction market sector. This comes as major consumer finance and online betting companies are actively developing their own infrastructure for event contracts, setting the stage for potential mergers and acquisitions.
Analysts, led by Ian Moore, suggest that while both Kalshi and Polymarket have established technological capabilities, they fall short of larger competitors in terms of audience reach. Bernstein noted, "this makes each of them more of a potential target than a buyer."
Consolidation in the Prediction Market
Bernstein's report emphasizes that companies equipped with their own audience and infrastructure are better positioned to capture a larger share of the market, intensifying competition for those with technology but lacking distribution channels. A prime example is DraftKings, which acquired Railbird in October 2025 to bolster its own exchange, DKeX, and subsequently transitioned trading from external platforms to its own by mid-2026.
In a similar vein, Robinhood partnered with Susquehanna to create the Rothera exchange, channeling significant volume through its prediction markets, with estimates suggesting over 16 billion event contracts processed in 2026 alone. Meanwhile, Coinbase has taken a different approach by acquiring The Clearing Company to enhance its regulated prediction market capabilities, predicting annual revenues of around $100 million from this segment.
Challenges for Kalshi and Polymarket
Despite being recognized leaders in the prediction market, Kalshi and Polymarket face significant challenges due to their limited audience reach compared to giants like Robinhood, Coinbase, and DraftKings. These companies not only enjoy substantial customer bases and brand recognition but also the ability to launch products swiftly while retaining more revenue and user data.
As a result, Kalshi and Polymarket may need to consider strategic partnerships or acquisitions to enhance their market position. Bernstein highlighted Polymarket's status as a notable on-chain project but warned that the emergence of regulated competitors could limit its growth trajectory. The analysts noted that the convergence of prediction markets with sports betting and financial services presents new avenues for potential deals, such as bookmakers acquiring exchange infrastructures or brokers expanding their offerings to include event contracts.
However, not all potential mergers are viewed as feasible. For instance, a merger between Flutter and DraftKings, which could streamline user acquisition and create synergies, is deemed unlikely. Additionally, recent reports indicate that Meta is exploring collaboration with Kalshi and Polymarket as it develops its own prediction market service, tentatively called Arena. This comes amidst calls from U.S. gaming associations urging the Senate to regulate prediction markets in the context of new cryptocurrency legislation.
