In the past eight months, major players in consumer finance and online betting have begun building their own exchange infrastructure for event contracts. According to analysts at Bernstein, this sets the stage for a wave of M&A activity in the prediction market space, CoinDesk reports.
Analysts led by Ian Moore have identified Kalshi and Polymarket as potential acquisition targets. They believe both platforms have their own technological foundations but lag behind larger brokers and betting companies in reaching a mass audience.
"[...] this makes each of them more of a potential target than a buyer," Bernstein stated.
Major Players Consolidate the Market
Bernstein estimates that companies with their own audience and infrastructure will be able to retain more of the economy within their business. This creates pressure on players who have technology and liquidity but lack comparable distribution channels.
One example of vertical integration cited by analysts is the American online betting operator DraftKings. In October 2025, the company acquired Railbird and launched its own exchange, DKeX, integrated into DraftKings Sports & Casino, based on that acquisition .
DraftKings Acquires Railbird to Advance Future Growth in Prediction Markets
Today, @DraftKings announced the acquisition of Railbird, a federally licensed exchange designated by the CFTC. The acquisition supports DraftKings’ broader strategy to enter prediction markets,… pic.twitter.com/nrWicK9cUa
— DraftKings News (@DraftKingsNews) October 21, 2025
According to CoinDesk, after launching its platform, DraftKings transitioned trading from the CME and Crypto.com infrastructure to its own platform by the end of June. Bernstein estimates the consumer volume for this player at approximately $3.4 billion annually.
A similar strategy has been observed with online broker Robinhood. The company, in collaboration with Susquehanna, created the Rothera exchange and began directing contracts for the World Cup to it. Bernstein estimates that in 2026, over 16 billion event contracts passed through Robinhood's prediction markets.
Coinbase opted to acquire an infrastructure player. The exchange acquired The Clearing Company to develop regulated prediction markets as part of its Everything Exchange strategy. The report authors estimate the company's revenue from prediction markets at around $100 million annually.
Why This Puts Pressure on Kalshi and Polymarket
Kalshi and Polymarket remain among the most recognized platforms in the segment. However, Bernstein points out their vulnerability: they have technology and liquidity but lack the mass audience access enjoyed by Robinhood, Coinbase, and DraftKings.
These companies already possess large customer bases, recognizable brands, and integrated financial or betting products. If they establish their own exchange infrastructure, they will rely less on external platforms for contract execution. Additionally, they can launch new products more quickly and retain more commissions and data.
This increases the likelihood of strategic deals for independent players, ranging from selling their businesses to seeking partners with strong distribution channels. Analysts noted that Polymarket remains one of the most prominent on-chain projects in the prediction market category, but the rise of regulated competitors with mass audiences may narrow its independent growth options.
According to analysts, prediction markets are gradually converging with sports betting, brokerage applications, and consumer financial services. This opens up opportunities for deals that previously seemed less likely: bookmakers may acquire exchange infrastructure, exchanges may seek access to audiences, and brokers may expand their product offerings with event contracts.
However, Bernstein does not consider all scenarios equally realistic. For instance, the merger of Flutter and DraftKings is described in the report as unlikely, although such a deal could reduce user acquisition costs and create synergies in prediction market infrastructure.
It is worth noting that in June, media reported that Meta is considering collaboration with Polymarket and Kalshi as it continues to develop its own prediction market service, tentatively named Arena.
Earlier, American gaming associations urged the U.S. Senate to ban prediction markets related to sports and gambling as part of a new cryptocurrency regulation bill.