Citizens: Prediction Markets Siphon Super Bowl Bets, Challenging Legacy Sportsbooks

Prediction markets encroach on Super Bowl wagering, Citizens says

Citizens Financial Group’s equity research team is flagging a structural shift in how Americans wager on marquee events as prediction markets siphon volume from legacy sportsbooks. Jordan Bender, a senior equity analyst at Citizens, says federally regulated exchanges such as Kalshi and the relaunching Polymarket are “taking a bite out of” traditional Super Bowl handle by opening event contracts to millions of Americans in states where sportsbook apps remain illegal. That diversion is particularly visible around today’s Seattle vs. New England matchup at Levi’s Stadium in Santa Clara, which market participants expect to drive record trading volumes on those platforms.

Data show the phenomenon is rapidly scaling. Dune analytics indicate Kalshi records nearly $10 billion in contracts traded in January, roughly $8.5 billion tied to sports, while the American Gaming Association estimates traders on Kalshi and Polymarket have swapped about $800 million in Super Bowl contracts so far versus an expected $1.8 billion wagered through regulated sportsbooks. H2 Gambling Capital’s Ed Birkin forecasts total wagers, excluding prediction markets, will rise 9% to $1.78 billion, and expects prediction markets to attract roughly $630 million for the Super Bowl — accounting for some 80% of year‑over‑year growth in event betting. Citizens frames these flows as a redistribution of demand that challenges the incumbents’ product mix and customer access models.

Industry sources and Citizens’ research emphasize that the change is not merely a short‑term novelty but a potential re‑engineering of distribution and regulatory exposure in the US wagering market. Polymarket secures Commodity Futures Trading Commission approval to relaunch in the United States, and professional bettors report intensive adoption among sharp players, increasing the competitive pressure on legacy operators. Citizens notes operators may need new products, strategic partnerships and clearer regulatory frameworks to regain displaced handle and preserve customer relationships as prediction markets expand into sports.

Regulatory and legal friction

The expansion of federally regulated event contracts prompts legal fights with federal and local gaming regulators, as exchanges operate in states where traditional sportsbooks are restricted. The dispute raises questions about oversight, consumer protections and tax treatment across a broader set of event markets.

Implications for operators and investors

Citizens says the sector will watch upcoming operator results and user metrics closely. Legacy sportsbooks face choices on product innovation and collaboration with exchanges, while regulators consider whether and how to integrate prediction markets into existing gambling frameworks.