NEW YORK CITY, New York: Prediction market platform Polymarket has crossed US$1 billion in annualized revenue, underscoring the rapid growth of a sector that has drawn increasing interest from retail traders and institutional investors alike.

The milestone, confirmed by a source familiar with the matter, comes as prediction markets have expanded beyond their niche roots in crypto and academic finance into one of the fastest-growing segments of online trading.

The industry has seen a surge in trading volumes and user activity over the past two years, with platforms allowing users to buy and sell contracts tied to the outcomes of future events.

Polymarket reached the revenue milestone about six weeks after launching access to its U.S. exchange, allowing customers in the country to trade on the platform, the source said.

"Polymarket is a product-led company," a spokesperson said in an emailed statement to Reuters. "We spent the last five years building the world's largest prediction market and understanding how people engage with markets at scale. We are applying those learnings to our U.S. platform."

As the sector expands, prediction market operators are increasingly targeting institutional investors and hedge funds in addition to retail traders.

Some of Polymarket's most active markets currently allow users to trade on outcomes ranging from the winner of the FIFA World Cup to whether the Strait of Hormuz will be closed.

The industry's rapid rise has also attracted backing from traditional financial firms. Last year, Intercontinental Exchange, the parent company of the New York Stock Exchange, agreed to invest $2 billion in Polymarket, marking one of the strongest endorsements yet of the growing prediction market industry by a major financial institution.

CNBC first reported Polymarket's revenue milestone on June 26.