Investing in Guessing – Are Prediction Markets an Emerging Asset Class?

This newsletter is part of The Assetizer, GenTwo's thought leadership platform.

Prediction markets are one of the most striking “frontier assets” I’ve come across recently, mainly because of how fast they’ve gone from niche to massive.

A couple of years ago, these markets were a curiosity for geeks and gamblers. By early 2024, monthly trading volumes were still only around 100 million dollars. By the end of 2025, they were running above 13 billion a month—a more than hundred‑fold increase. One set of estimates puts 2024 global trading volume near 9 billion and 2025 around 40 billion, with some forecasts pointing to roughly 1 trillion a year by 2030 if growth continues. On some major platforms, 2025 combined trading volume is reported in the hundreds of billions. In other words, this is no longer a side‑show; it’s beginning to look like a young derivatives market finding its feet.
From an assetization perspective, however, the interesting question is not just “is this gambling or investing?”, but “what would it take for this to become a regular tool on a family office or private bank’s product shelf?”
 

Guessing, Gambling… or Pricing the Future?

In prediction markets, you are generally buying contracts that pay out if something happens and go to zero if it doesn’t. The price behaves like a probability. If a contract on “rate cut at the next Fed meeting” trades at 60, the market is effectively saying there is a 60% chance of that outcome. You can do this for elections, inflation prints, policy decisions, sports finals, and increasingly, for more “evergreen” topics like economic data and climate events.
 

Seen from the outside, it is easy to file this under gambling. But if you look at it a bit more closely, what is really being traded is information about the future. Every trade reflects someone’s view, plus whatever private or specialised knowledge they are willing to back with money. That makes these markets closer cousins of options and CDS than of a weekend flutter.
 

Carving Out Specific Questions
 

What makes this interesting, in assetization terms, is that these contracts carve out very specific questions. In traditional markets, we mostly trade bundles: when you buy a stock or a bond, you’re getting growth, policy, sentiment, and company‑specific risk all mixed together. Here you can separate out one narrow risk—“Will this law pass?”, “Will inflation be above X next month?”—and trade exactly that.
 

It’s a cleaner way of turning beliefs about the future into something financial. You move from “I think policy will be more dovish than the market expects” in a vague sense to a very explicit bet on one meeting, one number, one decision. The “guess” becomes a priced, tradable object.
 

From Data Point to Investible Asset
 

The growth story is not happening in a vacuum. Regulated venues have emerged. Big listed exchanges and retail platforms are moving in. Data from prediction markets has started to appear on professional terminals alongside more familiar prices. Regulators are now openly talking about a dedicated rulebook for these “event contracts,” which suggests they see this as a permanent feature of the landscape, not a temporary anomaly.
 

This is where the “investing in guessing” question becomes more interesting. Even if you never trade a single event contract, prediction markets are already useful as data. They offer live, quantified probabilities for events that move portfolios: central bank decisions, elections, key economic prints. Many investors today use them exactly this way: as one more input on the screen, alongside implied probabilities from options markets and survey data. In that sense, prediction markets are already part of the investment process, even if they are not yet a formal asset class in most mandates.
 

Assetization: Turning a Frontier into a Product
 

And yet, most asset managers still interact with prediction markets, if at all, as spectators. You might glance at the odds before an election, or check what the market thinks about the next central bank move, but you probably don’t see them as a formal part of client portfolios. The underlying markets are there; the asset class is not quite “made” yet. That gap is exactly where assetization has work to do.
 

Our working assumption, and the thesis of our book, is that over time almost any stream of risk and return can be turned into an investible product. Prediction markets are an almost perfect test case: the risks are clearly defined, the markets exist, and what’s missing is the wrapper that lets you offer this kind of exposure to your own clients.
 

There are a few obvious ways to turn this frontier into something investible:
 

• You can run diversified trading strategies across many different questions and maturities, and then package that activity into a familiar note or certificate.
   
• You can use these contracts as targeted insurance against particular risks that sit in existing portfolios—election outcomes, regulatory decisions, key economic releases.
   
• Or you can treat the market’s probabilities as signals that help you decide how to position in equities, bonds, and currencies, while giving clients exposure to a conventional securities portfolio.
   

A securitization platform acts as the bridge. It takes this very granular, question‑driven world and wraps it into something that looks and feels like any other investment product: a security with an identifier, clear terms, and standard custody. For a family office, a mid‑tier bank, or a specialist asset manager, this is exactly the kind of frontier where you can start to design your own products instead of waiting for the large manufacturers to arrive.

Prediction markets have a long way to go, and raise many questions. But the speed and scale of their recent growth convince me they will sit alongside them, as a way to price—and eventually to own—very specific questions about the world. In that sense, “investing in guessing” may turn out to be less about gambling, and more about finding a new way to turn information into an asset class.

Further reading

• WealthBriefing – “The Explosive Growth Of Prediction Markets”
  Private‑banking‑oriented overview of how prediction markets moved from sub‑USD 100m to multi‑billion monthly volumes, with clear numbers and context for wealth managers
• International Banker – “Accounting for the Explosive Growth in Prediction Markets”
  Breaks down the growth math (from under USD 100m per month to over USD 13bn) and gives detailed figures for leading platforms’ 2025 activity, framed for a traditional finance audience.
• The Gaming Boardroom – “Prediction markets could reach $1 trillion in annual volume by decade’s end”
  Summarises industry research projecting prediction markets to around USD 1tn in annual volume by 2030 and explains the underlying assumptions, especially the role of sports.
• KuCoin News – “Polymarket and Kalshi Reach $40 Billion Valuation and Near $400 Billion Trading Volume in 2025”
  Provides combined notional trading figures in the “hundreds of billions” range for the major venues and highlights just how large 2025 activity was on a platform level.
• CoinMarketCap Academy – “Polymarket Prediction Data Enters Mainstream with Bloomberg Terminal Integration”
  Shows how prediction‑market data is now available on Bloomberg, supporting the idea that these markets are already used as information inputs by professional investors.
• Sidley – “U.S. CFTC Signals Imminent Rulemaking on Prediction Markets”
  Concise legal summary of the current U.S. stance, including the move toward a dedicated rulebook for event contracts and the withdrawal of earlier restrictive proposals.
• CFTC – Chairman Selig: “America’s Financial Markets are ready for a Golden Age”
  Primary‑source speech where Selig explicitly talks about supporting the “responsible development” of event‑contract markets, useful for readers who want to see the regulatory language first‑hand.