Combo contracts drive over half of Kalshi notional volume as prediction markets surge

CNBC··US·Read original
3▲0 ▼2Impact / 5
Summary · why it matters

Combo contracts, which stack multiple prediction-market positions and pay out only if all legs win, have exploded in popularity and now account for more than 50% of notional volume on Kalshi, driven by the start of the NFL season, while making up less than 13% of the platform's total transactions in September. On rival Polymarket's U.S. exchange, which officially launched in May, combos now represent nearly 50% of daily volume, also helped by NFL-season growth. The outsized volume share stems from how the Commodity Futures Trading Commission requires exchanges to report activity: every event contract is measured as $1 of notional volume regardless of the cash a trader puts down, but combos can carry payouts far above $1, so a few cents of premium can register as thousands of dollars in volume once market makers take the other side. A CNBC analysis of Kalshi trades on Sept. 27 found the average cash placed on a single contract was less than 47 cents, versus about 9 cents per contract on combos, and outside sports, combos top all other categories on Kalshi with over 35% of total notional volume. The surge in sports-related event contracts has weighed on traditional online sportsbooks, with Flutter Entertainment, the parent of FanDuel, and DraftKings down 70% and 45% respectively over the past year, though Bernstein analyst Ian Moore said investors may be comparing non-comparable figures because a sportsbook handle measures total dollars wagered while prediction markets count both sides of a trade. Kalshi spokesperson Jack Such said the platform's notional volume does not overstate activity, while Polymarket head of revenue and analytics Kyle Gesuelli said the company prefers to look at taker volume for buying yes on combos as a truer measure of underlying activity.

Impact on assets 2

Consumer Discretionary▼
DraftKings Inc
DKNG
▼ NegativeCompetitionrelevance

Surge in sports-related prediction-market combo contracts is weighing on traditional online sportsbooks, with DraftKings down 45% over the past year.

Flutter Entertainment plc
FLUT
▼ NegativeCompetitionrelevance

Flutter's FanDuel sportsbook is pressured by the boom in sports-related event contracts on prediction markets, with the stock down 70% over the past year.

Off-coverage companies 3

Kalshii
Private▲ PositiveDemandrelevance

Combo contracts now exceed 50% of Kalshi's notional volume, driven by NFL-season growth in event-contract activity.

Polymarketi
Private▲ PositiveDemandrelevance

Combos represent nearly 50% of daily volume on Polymarket's U.S. exchange, helped by NFL-season growth.

FanDueli
Private▼ NegativeCompetitionrelevance

FanDuel, as Flutter's sportsbook brand, faces pressure from the surge in sports-related prediction-market contracts.