Gemini Exchange Plans to Launch Prediction Market Contracts Trading – A Bold Play or a Late Entry?

In what could mark one of its most daring pivots since entering the cryptocurrency industry, Gemini Exchange is preparing to launch a prediction contracts market for politics, finance, and sports, according to a Bloomberg report.

Earlier this year, Gemini, one of the best crypto exchange platforms led by the Winklevoss brothers, made headlines for its long-awaited debut on the Nasdaq and also for submitting a license application to the Commodity Futures Trading Commission (CFTC).

However, concerns have been raised about the profitability of this initiative in a competitive industry like the betting market. While Gemini may not benefit from the first-mover advantage enjoyed by Polymarket and Kalshi, the rising activity in the market presents a unique opportunityleaves room for a credible and strategic new entrant.

More Bets Ahead as Prediction Markets Expand

After decades on the fringes, the prediction market regained more prominence. This has been attributed to mainstream adoption of betting within the crypto market as a derivative product.

Platforms such as Kalshi and Polymarket have reported an explosive surge in trading volume and user engagement. According to available data, Polymarket processed up to $9 billion in 2024 with a monthly peak of $2.6 billion in November. Kalshi trailed behind with a trading volume of $500 million.

Analysts suggest this expansion signals an evolving market from niche speculation towards more mainstream financial utility. This implies that the market is growing towards being an information asset.

Gemini Re-Strategizes After Years Of Market Headwinds

In the past two years, Gemini has faced significant headwinds that have now forced it to rethink its strategy. The most damaging setback came through its Earn program, which was organized in partnership with Genesis Global Capital. The program subsequently came under scrutiny by the U.S. Securities and Exchange Commission (SEC) for offering unregistered securities, and the companies were heavily fined.

At the time, Genesis Global Capital had halted withdrawals and declared bankruptcy, leaving approximately $900 million of customer assets frozen. Subsequently, Gemini reached a settlement with the New York Department of Financial Services (NYDFS) to refund over $1.1 billion to affected users.

Also, its recent IPO decline raised concerns over Gemini’s development. The company’s heavy reliance on traditional crypto trading has left it vulnerable during prolonged market downturns. The company posted $67 million in the first half of the year compared to $73 million during the same period in 2024.

As competition stiffens, Gemini’s ability to innovate and diversify its service offering will determine whether it regains its footing or not. This, perhaps, is why the company is gunning for the fast-paced prediction market.

Regulatory Uncertainty Persists Amid Growing Prediction Market

The U.S prediction market currently occupies a regulatory gray area. The CFTC has historically cracked down on unauthorised event contracts for violating public law.

Under the previous Biden administration, Kalshi faced significant scrutiny. Regulators opined that the approval of event contracts was incompatible with public interest. However, this stance has started to shift under the new Trump administration.

In late 2024, a federal appeals court cleared Kalshi to relist election-related contracts and operate under the defined legal framework. Meanwhile, the CFTC recently gave Polymarket a clear way to return to the U.S after the latter acquired a CFTC-licensed derivatives exchange, QCEX, and agreed to geo-block U.S users while maintaining its global outlook.

While this suggests an inconsistent framework, the best crypto exchange platforms like Gemini could exploit any of these paths. Already, the exchange has secured a license under the European Union’s Markets in Crypto-Assets (MiCA) framework that allows it to expand its offering across the EU, including staking and derivatives.

Also, in May, the parent company, Gemini Space Station Inc., approached the CFTC for approval to register a derivative exchange known as “Gemini Titan”. This indicates that the company is well-positioned to play in this market.

Gemini’s Proposed Launch: A Bold Play or A Late Entry?

Gemini’s proposed launch in the prediction market has generated mixed reactions among analysts. The debate has been whether this launch would make a strategic play or a late arrival to an already saturated market.

While Kalshi and Polymarket may have taken a lion’s share of the market, the business logic behind Gemini’s move is hard to dismiss. Prediction market activity has been soaring in recent months. The lead players, Polymarket and Kalshi, processed more than $2 billion worth of wagers in October, which surpasses the record set during the 2024 U.S presidential election.

This surge reflects a renewed wave of interest in the prediction market. With strategic positioning, Gemini could seize a leading role in this market. Moreover, the timing works in Gemini’s favor. With the CFTC warming up to the idea, Gemini’s successful attempt may position it as one of the leading legitimized platforms.

However, some would argue that competing effectively in today’s crowded market requires more than new product categories. Many firms are expanding into no fee crypto exchange models that prioritize transparency and speed, areas where Gemini’s innovation could set it apart if executed well.

Conclusion

There is a growing wave of crypto exchanges shifting their revenue model from solely the traditional trading to stable or innovative segments such as fiat-to-crypto onramp. An example is Coinbase, which diversified through a partnership on stablecoins with Circle.

Similarly, Gemini is making the move to diversify into the prediction market as a strategic move to improve its revenue. In the last two years, the company has cracked down under regulatory scrutiny and a series of market downturns.

Likewise, since its IPO debut, Gemini’s stock has consistently faced a downward trend. However, with a potential launch of prediction market contracts trading in view, Gemini shows its commitment to embracing innovation in an increasingly competitive market.