Surge in Popularity of Combo Contracts in Prediction Markets Drives Volume Growth
- Combo contracts accounted for over 50% of notional volume at Kalshi as of September 2026, boosted by the NFL season.
- Despite high volume percentages, most trading activity occurs through single contracts due to regulatory reporting requirements.
- Traditional sportsbooks are facing challenges as prediction markets gain popularity, impacting companies like Flutter Entertainment and DraftKings.
The rising popularity of combo contracts on prediction markets is resulting in significant increases in trading volume. These contracts, which are analogous to parlays in traditional sports betting, require all included predictions to win in order to receive a payout. As of September 2026, combo contracts represented over 50% of the notional volume on Kalshi, mainly driven by the NFL season.
Rival platform Polymarket also prioritized the combo contracts strategy after its U.S. exchange launched in May 2026, with these contracts now comprising nearly 50% of daily volume on its platform.
Large Share of Volume
Despite the significant contribution of combos to overall volume, they do not account for the majority of trading transactions on prediction markets. This discrepancy arises from the Commodity Futures Trading Commission (CFTC) regulations mandating that exchanges report volume metrics. As noted by Chris Park, founder of MSR Decode, multi-leg contracts allow platforms to report higher notional volumes with lower actual cash outlay.
In practice, trades on Kalshi illustrated this phenomenon; on September 27, the average cash placed per single contract trade was under 47 cents, whereas for combo contracts, it was about 9 cents. Despite combos making up 58% of Kalshi’s trading volume in September 2026, they represented less than 13% of total transactions, according to data from Dune.
Beyond sports, combos constitute over 35% of total volume on Kalshi, surpassing other categories. However, the methods behind their measurement can obscure the true growth metrics of prediction platforms.
The increasing traction of sports-related events on prediction markets has adversely affected traditional sportsbooks, with companies such as Flutter Entertainment and DraftKings seeing stock declines of 70% and 45%, respectively, over the past year.
Apples and Oranges
Investors may misinterpret activity numbers due to the differing metrics used in prediction markets versus sportsbooks. Ian Moore of Bernstein highlighted that while prediction markets report notional values, sportsbooks measure the total dollar amount wagered, known as the “handle.” This discrepancy can lead to inflated perceptions of prediction market activity.
Rich Jaycobs, an independent advisor, emphasized that reporting practices result in prediction markets reflecting dollar volumes that can be 20 to 100 times higher than sportsbooks for analogous bets. Although Kalshi insists its notional volume accurately represents activity, adjustments are being suggested to focus on taker volume, which reflects actual trader demand.
According to Kyle Gesuelli of Polymarket, analyzing taker volume for combo transactions may provide clearer insights into underlying trading activity.
News Courtesy of CNBC
