What Prediction Markets Mean for Financial Markets
Introduction
In early August 2026, as the Citi Open and DC Open tennis tournaments reached their finals in Washington, the trending feed carried something unusual alongside the match previews: prediction-market contracts on individual tennis matches, listed by the retail brokerage Robinhood. Fans could trade a “set 2 winner” contract on the same app they use to buy stocks.
Prediction markets — venues where people buy and sell contracts whose payout depends on the outcome of an event — are not new. Political betting markets have existed for centuries. What is new is their arrival on mainstream retail trading platforms, where they sit alongside stocks, options, and ETFs. This article explains what prediction markets are, how they relate to traditional financial markets, and what the data on stock trading activity can — and cannot — tell us about them.
What prediction markets actually are
A prediction market is a market in contracts whose value is tied to the probability of a future event. A contract that pays $1 if a tennis player wins a set trades near the market’s implied probability of that outcome: if it trades at $0.60, the market is pricing roughly a 60% chance. The same structure is used for election outcomes, interest-rate decisions, and even the path of a hurricane.
They are called event contracts when the payout is binary — yes or no on a single outcome — and are typically settled automatically when the event resolves. This makes them cheap to run and easy to trade, which is why retail platforms have embraced them. The mechanics are familiar: a buyer needs an account, a way to fund it, and a venue with liquidity.
Prediction markets are sometimes described as a cousin of derivatives — and the family resemblance is real. But there are important differences from conventional securities.
How prediction markets differ from stock markets
Underlying asset. A share of stock represents an ownership claim on a company. An event contract represents a claim on the outcome of an event. One is a long-lived investment; the other expires when the event resolves, often within days or hours.
Purpose. Stock markets exist to allocate capital to companies over years. Prediction markets exist to aggregate information about a specific question — the “wisdom of the crowds” argument for why they work. The two serve different economic functions, though they share plumbing.
Valuation. A stock’s price reflects expected future cash flows. An event contract’s price reflects an implied probability. You can value a stock with discounted cash flows; you can only price an event contract by reference to the event’s likelihood.
Regulation and data. Stock trading is measured, reported, and studied in detail — the World Bank tracks stocks traded as a share of GDP for 78 economies, and market capitalisation for 79. Event contracts are too new and too fragmented to appear in any comparable global dataset yet. That asymmetry matters: we have hard data on trading infrastructure, but not on prediction-market volumes.
For the classic framing of what stock trading activity measures, see our article on where stocks trade most actively.
How to read the trading data behind the boom
Prediction markets may be new, but they ride on infrastructure that is very unevenly distributed across economies. The World Bank’s stocks-traded metric — the total value of shares changing hands each year as a share of GDP — is the best available gauge of how actively a market trades. The leaders show what active trading looks like:
| Economy | Stocks traded (% of GDP) | Year |
|---|---|---|
| Hong Kong | 736.5% | 2024 |
| China | 186.1% | 2024 |
| Japan | 183.3% | 2024 |
| South Korea | 166.7% | 2024 |
| United States | 148.2% | 2024 |
| India | 85.6% | 2024 |
In Hong Kong, trading is worth more than seven times GDP — an extreme example of turnover intensity. In the United States, turnover is 148.2% of GDP, but the absolute size of the market is unrivalled: listed companies were worth $68.9 trillion in 2025. For the full ranking of market sizes, see the largest stock markets by capitalization.
These figures tell us which economies have the market depth, trading culture, and digital rails to support retail financial innovation — from fractional shares to event contracts. For a ranking built on exactly that question, see our report on where retail trading infrastructure runs deepest 2026.
What the data cannot tell you about prediction markets
No global prediction-market statistics exist yet. Unlike stocks traded or market capitalisation — tracked across ~78–79 economies by the World Bank — event contracts have no standardised international dataset. Volume figures circulating in the media are platform-reported and not comparable across venues.
Trading activity is a proxy, not a measure. A high stocks-traded share of GDP says a market is active, not that it will adopt new products. Hong Kong trades more than anyone relative to GDP, yet the first major retail event-contract push happened in the United States — a function of regulation, platform competition, and market size rather than turnover intensity alone.
The base year matters. Stocks-traded figures are observed values from 2024 (or earlier for some economies). They are not projections, and they capture the pre-prediction-market era. The infrastructure picture may already be shifting.
Prediction markets are not a measure of financial inclusion. An adult with a brokerage account who trades tennis contracts is participating in finance, but so is an adult paying a utility bill by mobile money. The two kinds of participation are not interchangeable. For the inclusion side of the story, see what digital payment adoption means and our report on the digital payments divide.
What 2026 looks like
Prediction markets entered 2026 as the fastest-growing retail financial product category in the United States, with tennis, elections, and rate decisions among the most-traded event classes. The trend has no projection in our datasets — global statistics on event contracts simply do not exist yet. What the data does show is that the markets best positioned to host this growth — deep, active, and digitally wired — are concentrated in a small group of economies led by the United States, Hong Kong, China, Japan, and South Korea. Whether event contracts spread beyond those markets will depend less on the contracts themselves than on the trading rails underneath them.
Sources & method
All figures are transcribed from the FinStatGlobe derived datasets. Stocks traded (% of GDP) and market capitalisation come from the World Bank’s World Development Indicators; digital payment adoption comes from the World Bank Global Findex. Figures are observed values cited with their own data years (2024–2025 for the figures above) — none are projections. Prediction-market volumes are not included in any comparable international dataset and are deliberately not cited as statistics. For full details on methodology, see our methodology page.