The $120 Billion Mirage: Penny Combos Inflated Prediction Market Volumes in Q3

Prediction markets celebrated a record $179.6 billion in trading volume in the third quarter. Still, a look beneath the headline figures reveals that actual capital deployed was less than a third of that total.

According to the data from Prediction Frontier, traders paid just $56.1 billion for those contracts, with the massive $123 billion gap driven by how venues count low-cost multi-leg "combos."

The report, covering Kalshi, Polymarket’s international and US venues, and Novig, reflects the gap, created by the counting specifics: cheaper combinations of outcomes generate substantial payout-based volume from comparatively small purchases.

How $56 Billion Became $180 Billion

The report counts each traded contract at its $1 payout value, a convention Kalshi also uses in its reporting. Its alternative measure, “dollars paid”, multiplies the number of contracts by their execution price.

Buying 100 contracts for three cents each therefore produces $100 in nominal volume and $3 in purchase payments.

Combos widen the difference by combining several outcomes in one position. Under Kalshi’s rules, a combo pays $1 when every component settles at $1; any component settling at zero makes the whole contract worthless.

Low-priced combinations consequently generate more nominal volume per dollar spent on prediction markets.

Neither volume measure represents fresh deposits: contracts can trade repeatedly, and traders can reuse funds.

Kalshi’s Combos Widen the Gap

Kalshi combos accounted for $67.1 billion of quarterly nominal volume, which is more than a third of the four-venue total. On Kalshi, the average purchase payment per $1 contract fell from 32 cents in July to 24 cents in September.

Polymarket’s figure stayed near 50 cents. That changing mix matters when interpreting monthly records. Kalshi’s September nominal volume reached $60.7 billion, but dollars paid totalled $14.7 billion, just 10% above July, according to the report.

Across the tracked venues, nominal volume grew 84.3% quarter-on-quarter, against 54.7% growth in dollars paid. Nominal volume thus increased from about 2.7 times purchase payments in Q2 to 3.2 times in Q3.

The comparison includes expanded coverage, with Novig data beginning on August 4. Both measures rose in Q3, but their widening gap changes how the market’s records should be read.

For brokers comparing venues or gauging customer activity, nominal volume alone can obscure a shift toward cheaper contracts; dollars paid show whether purchase spending kept pace.