Retail investors have a new 'toy' for speculation, Barclays says

• Prediction market monthly volume is now comparable to high-risk leveraged exchange-traded products and index call overwrite strategies as of 2025
• Sports contracts dominate prediction market activity on both Kalshi and Polymarket, with the majority of volume focused on non-economic outcomes
• Nearly one-third of Gen Z and almost a quarter of millennials are currently participating in or considering prediction markets and sports betting, according to recent survey data

Summary: Retail Investors Embrace Prediction Markets as New Speculative Vehicle

Prediction markets have emerged as "retail's shiny new toy," according to Barclays analysts, experiencing explosive growth since the 2024 presidential election. Monthly notional volume on these platforms has surged dramatically, with total volume on leading platforms Kalshi and Polymarket reaching over $24 billion as of April 2026, up from less than $5 billion a year ago, per Dune Analytics data.

Key Comparisons:

The monthly notional volume for prediction markets now rivals leveraged exchange-traded products (ETPs)—high-risk investments using debt and derivatives—and is comparable to index and single-stock call overwrite strategies. However, prediction markets still lag significantly behind flagship retail products like zero-day to expiration (0DTE) options on the S&P 500, which recorded nearly $57 trillion in total value traded in March.

Market Activity:

Sports contracts dominate prediction market volume on both major platforms, with the majority of activity focused on non-economic outcomes. Barclays analysts note that retail participation in derivatives markets has increased substantially in recent years, with retail investors now comprising the majority of S&P 500 0DTE options participants.

Demographic Trends:

A recent survey found nearly one-third of Gen Z and nearly one-quarter of millennials are either participating in or considering prediction markets and sports betting, highlighting the platforms' viral appeal among younger generations.

Industry experts suggest prediction markets' accessibility—featuring binary outcomes and diverse trading events—makes them an approachable entry point before advancing to higher-risk options trading. The growth represents continued expansion of retail speculation beyond previous trends like meme stocks and cryptocurrency.

*Disclosure: CNBC has a commercial relationship with Kalshi.*