Citizens analyst: Prediction markets eroding traditional sportsbook Super Bowl handle

Citizens analyst flags prediction markets as a structural threat to sportsbook handle

A senior equity analyst at Citizens Financial Group says the rapid rise of federally regulated prediction markets is reshaping where Americans place event bets and undercutting traditional sportsbook volumes ahead of Super Bowl weekend. Jordan Bender tells clients platforms such as Kalshi and Polymarket are "taking a bite out of" legacy Super Bowl handle as today's Seattle‑New England matchup at Levi's Stadium is expected to drive record trading on those exchanges. The shift opens event contracts to millions in states where sportsbooks remain illegal and draws volumes that previously flowed through regulated apps.

Data show the scale of the shift. Dune metrics indicate Kalshi trades nearly $10 billion in contracts in January, about $8.5 billion tied to sports, while the American Gaming Association reports roughly $800 million in Super Bowl contracts on Kalshi and Polymarket so far. That compares with an expected roughly $1.8 billion wagered through traditional regulated sportsbooks. H2 Gambling Capital forecasts that, excluding prediction markets, total Super Bowl wagers rise about 9% to $1.78 billion and estimates prediction exchanges attract roughly $630 million, accounting for most of year‑over‑year growth in betting volumes.

The growth prompts immediate operational and regulatory questions for sportsbook operators, market makers and financial institutions that track gaming flows. Industry participants say legacy operators need new products, partnerships and clearer regulatory frameworks to compete with event‑focused exchanges that allow smaller, nontraditional bets and attract professional traders. Prominent bettors and quantitative traders report intensive adoption of prediction contracts, suggesting a structural reallocation of high‑value handle into alternative venues where price discovery and liquidity differ from retail bookmaking.

Regulatory and market developments add momentum. Polymarket secures Commodity Futures Trading Commission approval to relaunch in the U.S. and rolls out an app, while legal fights with federal and local gaming regulators continue as exchanges expand contract types to include sports, elections and geopolitics. That regulatory attention is central to how the industry evolves and how banks, analysts and regulators monitor systemic exposures tied to alternative wagering.

For Citizens and other financial observers, the immediate focus is on metrics and product responses. As prediction markets reshape wagering flows, analysts watch operator results, user metrics and new commercial arrangements that could determine whether traditional sportsbooks can stem market share losses or adapt to a bifurcated wagering landscape.