Kalshi captured 72.4% of all hard cash in Q3, while Polymarket’s combined dual-platform totals still fall short.
Author: Alea Research
Compiled by: TechFlow
TechFlow Guide: For a long time, Polymarket has been regarded by outsiders as the undisputed king of prediction markets due to its volume in the crypto-native ecosystem and high-frequency discussions during elections. However, this heavyweight research report released by Alea Research, using detailed and rigorous on-chain and exchange panoramic data, uncovers a counter-intuitive cold truth:
In terms of real capital trading volume, Kalshi, a CFTC-registered compliant exchange, is dominating the entire sector with unstoppable momentum. In Q3 2026, Kalshi recorded cash transaction volumes of up to $37.3 billion, representing a quarterly growth of 75.8%. With an overwhelming market share of 72.4%, it firmly overshadowed both Polymarket International and Polymarket US, while its actual traded capital volume reached 2.6 times the combined total of the latter two.
Bolstered by the explosive growth of combo contracts (Combos), a massive distribution network integrated with mainstream retail giants such as Robinhood and Coinbase, and aggressive expansion into perpetual contracts for crypto assets and commodities, Kalshi has built an extremely deep liquidity moat.
Despite uncertainties in local jurisdictional lawsuits and evolving regulatory shifts from the CFTC regarding swap rules for event contracts, the core competitive axis of the prediction market has long evolved from mere crypto concept hype into a life-and-death race concerning compliance licenses, traditional broker channels, and clearing for all categories of derivatives.
In direct competition with the two exchanges under Polymarket (Polymarket International and Polymarket US), Kalshi captured 72.4% of the total cash transaction volume across the three platforms in Q3.
Chart: Sports accounts for 37.9% of average open positions, while crypto accounts for 1.93%
Key Takeaways
Kalshi's cash transaction volume in Q3 grew 75.8% quarter-over-quarter, with contract trading volume increasing by 116.1%, reaching $37.3 billion and 141.8 billion contracts respectively for the full quarter.
Kalshi's Q3 cash transaction volume was 2.6 times the combined total of the two Polymarket exchanges, up from 1.7 times in Q2. Polymarket International's full-quarter transaction volume declined by 30.1% to $8.1 billion, while Polymarket US surged significantly by 116.2% to $6.1 billion.
The share of combo contracts (Combos) in contract trading jumped from 36.5% in July to 58.3% in September; meanwhile, the share of sports-related contracts fell from 46.2% to 22.8%.
After state courts in Maryland and New York ruled on related lawsuits, the CFTC invoked emergency powers on August 11 to ensure Kalshi's continued normal operations. On October 9, the regulator proposed an event contract rule amendment, uniformly classifying sports and political contracts as swaps.
Among the 13 continuously traded contracts throughout the quarter, Kalshi's perpetual contract open interest grew 3.6 times, rising from $7.85 million in the first week of July to $28 million by the last week of September. Average daily notional trading volume rebounded from $235 million in July to $869 million in September.
Chart: Sports is the only sector showing a decline, with an average daily trading volume of 111 million contracts
August was the quietest month of the quarter, with average daily transactions of 1.29 billion contracts and a cash transaction volume of $11.4 billion; September rebounded strongly to 2.03 billion contracts and $13.6 billion daily averages, surpassing July's 1.34 billion contracts and $12.3 billion.
Exchange Overview
Kalshi is a CFTC-designated Contract Market (DCM) exchange that serves retail clients directly and reaches investors through brokerage networks including Robinhood and Coinbase. Across the three platforms of Kalshi, Polymarket International, and Polymarket US, total Q3 cash transaction volume grew 40.5% to $51.5 billion, with contract trading volume increasing by 81.3% to 195.8 billion contracts.
Chart: Quarterly cash transaction volumes: Q4 2025 at $7.3 billion, Q1 at $13.1 billion, Q2 at $21.2 billion, and Q3 reaching $37.3 billion
The $11.4 billion in August is the only single month in the past twelve months that did not set a new quarterly peak, while the full-quarter Q3 total of $37.3 billion successively surpassed Q2's $21.2 billion, Q1's $13.1 billion, and Q4 2025's $7.3 billion. September set a new monthly record of $13.6 billion.
Chart: Cash per contract in Q3 was 26.3 cents, compared to 32.3 cents in Q2
By the end of September, Kalshi's open contract volume reached 1.47 billion contracts, a 21.0% increase from 1.22 billion at the end of June. Combo contracts are the core growth driver, with their share of open positions surging from 10.9% at the end of June to 31.3% by the end of September.
Event Prediction Markets
Combo contracts (Combos) bundle two or more event outcomes into a single contract. On August 4, combo contracts surpassed sports contracts in trading volume for the first time and maintained the lead for the remainder of the quarter, with an average daily volume of 1.18 billion contracts in September, compared to just 462 million for sports.
Chart: Sports contract trading volume accounted for 46.2% in July, ranking first; by September, the combo contract share was more than double that of sports
Kalshi began charging maker fees on qualifying combo contracts starting August 25, assessing one cent per 100 contracts for legs crossing the bid-ask spread. Trading for combo contracts remained steady after the rate adjustment, averaging 1.05 billion contracts daily over the two weeks prior and 1.13 billion contracts daily over the two weeks following.
Chart: Average daily contract volume reached 2.03 billion in September, compared to 1.29 billion in August
By the end of Q3, open position volume for combo contracts reached 460 million contracts, far exceeding the 133 million in June. The average cash value per contract for this product is significantly lower than single-event markets: on September 30, each contract corresponded to only 14.1 cents, compared to the Q3 full-category average of 26.3 cents for Kalshi.
Following the settlement of the Men's World Cup Final on July 19, sports-related open positions closed at 463 million contracts, up from 375 million in June. Other categories encompassing politics, macroeconomics, entertainment, and weather averaged 401 million contracts in open positions for the quarter.
Chart: 15-minute Bitcoin contracts settle intraday, leaving no open positions at any daily close
Looking at the entire quarter, forward-series contracts held the bulk of open positions: political and macroeconomic contracts averaged 16.2% of total open contracts, while quickly expiring sports and 15-minute Bitcoin contracts averaged a combined 39.8%.
Chart: Senate control contracts will expire and settle on February 1, 2027, unless major media outlets reach a clear consensus for early resolution
On September 14, the Democratic Party overtook to become the favorite in Kalshi's Senate control market, with pricing reaching 54% by September 30, up from 38% in June. Meanwhile, in similar contracts on Polymarket International, the Republican Party still maintained a slight edge at a 52% probability (as of September 30).
The Federal Reserve raised the target federal funds rate range by 25 basis points on September 16. The Kalshi market priced the probability of rates remaining unchanged in October at 66% by September 30, well above the 31% recorded on September 17. For the expectation of another 25-basis-point hike in December, the price on September 30 stood at 41%, down from 58% on September 17.
Chart: Prices for the "October rates unchanged" contract: 30% on September 28, closing at 66% on September 30
The "October rate hike" contract closed at 43% on September 29, the same day New York Fed President John Williams stated that inflation data had not yet provided clear signals to pause rate hikes. The following day, after core PCE data showed a 0.2% month-on-month increase, the contract settled at 34%.
Kalshi Directly Confronts Polymarket
Kalshi's share of combined cash transaction volume across the three platforms (Kalshi, Polymarket International, and Polymarket US) rose month by month, climbing from 68.4% in July to 74.6% in September. In September, Polymarket US surpassed International with a 13.6% share against 11.7%.
Chart: In Q1, Kalshi accounted for 51.7% of the combined cash trading volume across the three platforms
Kalshi's own robust growth accounted for virtually all the market share gain: even assuming the two Polymarket exchanges maintained their Q2 cash volumes throughout Q3, Kalshi's share would still have reached 72.0%. During this period, Polymarket US transaction volume grew 116.2% to $6.1 billion, while International declined 30.1% to $8.1 billion.
Competitors rolled out event prediction products toward the end of the quarter: Hyperliquid activated its permissionless HIP-4 event market deployment on mainnet in late August. Polymarket US launched 15-minute Bitcoin contracts on September 28, a short-duration contract format that accounted for 11.6% of Kalshi's contract trading volume in Q3.
Chart: Polymarket US's Q2 baseline represented 13% of Kalshi's scale
Coinbase integrated Kalshi's market, while Robinhood listed Kalshi, ForecastEx, and Rothera as designated exchanges for its event contracts. Apex Fintech Solutions opened its API on August 13, allowing brokers to launch Kalshi markets on their own platforms, with tastytrade becoming the first to connect. The Tunica-Biloxi Tribe released a Kalshi-powered app on September 18, and investment platform Public launched Kalshi contracts featuring an AI trading agent on September 24. On the data and rights front, Genius Sports signed on August 5 to provide official soccer data, The Weather Company became the official settlement source for weather markets on August 27, and Kalshi also became the exclusive prediction market partner for the U.S. Open on August 31.
Perpetual Contracts
Among the 13 continuously traded contracts throughout the quarter, based on a 7-day moving average, Kalshi's perpetual contract open interest grew 3.6 times, rising from $7.85 million in the first week of July to $28 million by the last week of September. Over the same period, Hyperliquid's open interest increased 1.7 times, while Polymarket International launched its proprietary perpetual contract product on September 3.
Chart: Kalshi's Q3 daily reports covered 23 perpetual contracts; 10 contracts including gold and silver were launched mid-quarter
Kalshi launched a public beta for its Pro desktop trading terminal for event and perpetual contracts on July 13. Its perpetual contract rebate program precisely returns transaction fees paid by self-clearing members without over-refunding, with the plan running at least until December 31. Additionally, Kalshi pledged to inject $40 million of its own capital into the perpetual contract guarantee fund and launched 24/7 gold and silver perpetual contracts on September 10. On October 5, Kalshi formally applied to list equity index, copper futures, and aluminum futures perpetual contracts.
The aforementioned 13 contracts generated a total notional trading volume of $48.6 billion in Q3, approximately 30 times their average daily open interest. Average daily notional turnover dropped from $690 million in the second half of June to $235 million in July, before rebounding strongly to $869 million in September.
Chart: The 13 continuously traded crypto assets: Bitcoin, Ethereum, HYPE, XRP, Solana, Bitcoin Cash, Dogecoin, Shiba Inu, Chainlink, Litecoin, NEAR, Sui, and Zcash
On September 21, an on-chain analyst published an analysis alleging wash trading against Kalshi's Ethereum perpetual contracts. Kalshi responded the next day stating its trading rules strictly prohibit self-trading and found no evidence of collusive matching or fake transactions. Previously, on August 10, Kalshi signed a multi-year agreement to gradually integrate Nasdaq Market Surveillance into its event and perpetual contracts.
Key Developments & Dynamics
Following an order from a Michigan state court, the CFTC stated on July 14 that Kalshi must proceed with affected trades according to standard procedures. Nevada regulators announced that Kalshi agreed to implement geo-fencing by August 12 to block sports, election, and entertainment contracts for state residents. New York sued Kalshi on July 31, prompting the CFTC to invoke emergency powers on August 11 to maintain its operations. A Washington state court ruled on August 12 that Kalshi must cease offering sports, election, political, entertainment, and reference contracts within the state, requiring implementation of multi-source geo-fencing by September 2. Baltimore city sued Kalshi on August 13 over sports contracts, naming Robinhood, Webull, and Coinbase as co-defendants.
Chart: 7-day average open contract volume was $467 million on July 7 and $341 million on August 13
During the subsequent series of appellate rulings, Kalshi's average daily cash trading volume continued to climb. On August 28, the Ninth Circuit Court of Appeals ruled to terminate the injunction against Nevada regulators regarding sports contracts and remanded election contracts to district court for retrial. On September 16, the court found it more likely than not that two California tribes would prevail in their claims against Kalshi's sports contracts on their land; the Sixth Circuit issued unfavorable rulings for Kalshi in Ohio and Tennessee lawsuits on September 25. Kalshi filed a notice on September 25 requesting the Ninth Circuit to immediately rehear the case, or preserve its application if rehearing is deferred, pending the CFTC's finalization of the new event contract rules proposed on June 10.
Future Outlook
Federal Reserve rate decisions on October 28 and December 9 will conclude two rate-related contracts, while the midterm elections on November 3 will determine Senate control. New Jersey has petitioned the Supreme Court for review regarding Kalshi's victory in the Third Circuit, with Kalshi's response deadline set for November 9.
Chart: 3 of the 5 key dates will determine the contracts priced in this report: the Fed rate decisions on October 28 and December 9, and the midterm election on November 3
The CFTC proposed on October 9 to uniformly classify event contracts encompassing sports, politics, culture, and weather as swaps; the public comment period runs for 30 days following publication in the Federal Register. Kalshi's clearinghouse submitted an application to the CFTC on September 22, planning to introduce margin-leveraged trading for macroeconomic, financial, and political event contracts starting as early as November 9, while sports event contracts will continue to require fully prepaid margins. Kalshi terminated its Volume Incentive Program (VIP) on October 13 and filed an application on October 14 to implement a taker rebate for self-clearing members starting October 27.
Scenario Analysis: Q3 Cash Volume Remains Above Q2 Until Average Contract Price Falls Below 14.95 Cents
If calculated at Q2's average price of 32.3 cents per contract, Q3's total contract volume would generate $45.8 billion in cash transactions; conversely, applying Q3's average of 26.3 cents per contract to Q2's volume would yield only $17.3 billion in trading volume.
Chart: Based on September's 22.3 cents per contract, the Q3 total contract volume would generate $31.7 billion in cash transactions
Combo contracts drove rapid growth in the number of contracts traded internally within Kalshi's Q3, while simultaneously lowering the cash carrying capacity per contract: as the cash per contract gradually declined from 30.0 cents to 22.3 cents, the total monthly cash transaction volume still steadily climbed from $12.3 billion in July to $13.6 billion in September.
At September's daily average run rate of $452 million, a full quarter would record $41.6 billion in volume, 12% higher than Q3. Only if the cash carrying capacity per contract drops another 33% from September's level to 14.95 cents would the total cash generated by Q3 contract trading fall below Q2 levels.