Combo Contracts Boost Notional Volume on Prediction Markets Despite Low Transaction Share
Prediction market platforms are seeing a surge in notional volume driven by combo contracts, which resemble parlays in traditional sports betting. These multi-leg contracts can generate high payouts and account for over half of the notional volume at Kalshi and nearly half at Polymarket U.S., particularly during the NFL season. However, despite their outsized impact on reported volumes, combo contracts represent a small fraction—less than 13%—of total transactions. This discrepancy arises because each contract leg is counted as $1 of notional volume regardless of actual cash invested, often with traders placing bets for just pennies per trade. Researchers argue that this method inflates platform growth metrics and may mislead investors who compare these figures to traditional sports betting volumes. The rise in prediction market activity has also contributed to declining stock prices at major online sportsbooks like DraftKings (DKNG) and Flutter Entertainment.
Tickers: $DKNG
Topics: CFTC regulations combo contracts prediction markets volume reporting