Kalshi and Polymarket could become M&A targets as prediction markets consolidate: Bernstein
Bernstein analysts say prediction markets are converging with sports betting and consumer finance, driving a wave of M&A. Over the past eight months, major platforms have pursued vertical integration, owning both distribution and exchange infrastructure. Robinhood, Coinbase, and DraftKings have built proprietary exchanges, while Kalshi and Polymarket trail in distribution, making them potential acquisition targets. The sector has seen rapid growth from election betting and event contracts, with Robinhood trading over 16 billion contracts and Coinbase reaching ~$100 million annualized revenue. However, regulatory uncertainty persists between state gaming regulators and the CFTC over event contract classification. Continued court battles could shape future market structure. Consolidation among sportsbooks, including a potential Flutter-DraftKings combination, could also unlock synergies in prediction markets.
Key facts
- Bernstein: prediction market vertical integration increases M&A likelihood.
- Kalshi and Polymarket own exchange tech but lack user base, making them targets.
- Robinhood, Coinbase, DraftKings built proprietary exchange infrastructure.
- Robinhood traded over 16 billion event contracts; Coinbase annualized revenue ~$100M.
- Regulatory fight between CFTC and state gaming commissions could shape market.