The future, priced in cents: how prediction markets are going institutional
Every prediction market contract is a small promise: one dollar if something happens, nothing if it does not. Its price, somewhere between zero and a dollar, is the crowd's estimate of the odds, with money behind it. I have watched these prices for a long time, first while trading them and now through the collectors that record the order books of roughly five hundred Polymarket contracts for us. What has changed in the last eighteen months is not the mechanism. It is who is paying attention.
The data came first
Exchanges noticed before banks did. In October 2025, Intercontinental Exchange, the owner of the New York Stock Exchange, agreed to invest up to $2 billion in Polymarket. Part of the deal was the right to distribute Polymarket's event data to institutional clients as sentiment indicators.1 That detail says a lot. An exchange group does not buy into a venue to resell its numbers unless it thinks they belong on the same screens as rates and credit spreads.
Venture money followed at a scale that would have looked absurd two years earlier. In 2026 Kalshi announced a $1 billion Series F led by Coatue at a $22 billion valuation, with Morgan Stanley among the investors.2
Then the banks started asking questions
In January 2026, Goldman Sachs chief executive David Solomon told analysts the bank had people studying prediction markets, and that he had met the leaders of the two largest firms himself. His more telling point was about form: the CFTC-regulated contracts, he said, look like the derivatives business Goldman already runs.3
I think that is the right lens. Once an event contract is treated as a derivative and not a wager, a bank already knows how to approve it, book it, margin it and report it. The plumbing exists. What barely exists yet is a product layer between the raw contract and the people who would use it.
A contract is a component, not a product
Options traders learned long ago that a single digital option is a blunt tool. The value is in combining them, and event contracts work the same way. Take every possible range for next year's inflation print, buy each range in a different size, and you can build almost any payout across those outcomes: a note that pays most if inflation stays in a band, or one that pays at both extremes for a portfolio that gets hurt whenever inflation surprises.
The venues are heading this way too. In June 2026, FanDuel Predicts said it would add combination event contracts through Crypto.com's CFTC-regulated exchange, next to the contracts it already lists through CME Group.4 Combinations inside one venue are a start. The harder and more useful step is building across venues: buying each leg where price and depth are best, and handing the client one position with a payout they can read before they commit. That is the work we chose.
Liquidity is the real test
None of this matters if the books are thin, and here the news is mixed. Kalshi signed Susquehanna as its first dedicated institutional market maker in 2024,5 and in 2026 Jump Trading was reported to be taking equity in both Kalshi and Polymarket in return for providing liquidity.6 Professional market makers quote through the quiet hours, tighten spreads and close the gaps that open when two venues price the same event differently.
Plenty of trading firms are still waiting. Risk.net reported that many prop shops stay out because liquidity beyond the headline events is patchy and the legal footing keeps moving.7 Anyone who has tried to move size in a mid-tier economic market knows the feeling: the price on the screen is not the price you get. Pooling demand across venues, and packaging it so larger investors can size in without walking the book, is part of the answer.
What still has to change
Regulation is at the front of the queue. In March 2026 the CFTC published an advance notice of proposed rulemaking asking for public comment on event contracts listed on designated contract markets. Its staff issued advisories and asked for comment on direct clearing for retail participants, and the enforcement division brought insider trading cases tied to event contracts.8 What comes out of that process will decide which events can be listed, and on what terms.
Behind the rules come the unglamorous pieces: clearing through intermediaries institutions already use, custody they can explain to an auditor, margin that recognizes offsetting positions, and surveillance good enough to keep informed trading out. The data needs work as well. The same event should carry the same identifier and resolve on the same source wherever it trades, so a position built on three venues settles once, and cleanly.
We have seen this film before. Interest rate swaps and listed options both went through an awkward adolescence before they became infrastructure. Event contracts are earlier on that road, but the firms that built those markets are now in the room, and that usually makes the road shorter.
Sources
- Intercontinental Exchange, "ICE Announces Strategic Investment in Polymarket," 7 October 2025. ir.theice.com
- Pulse 2.0, "Kalshi: $1 Billion Series F Reportedly Expanded With Additional $200 Million At $22 Billion Valuation," 25 May 2026, citing Bloomberg. pulse2.com
- CNBC, "Goldman Sachs CEO is looking at how the Wall Street bank can get involved in prediction markets," 15 January 2026. cnbc.com
- Crypto.com, "FanDuel Predicts to Expand Event Contract Offering through Partnership with Crypto.com and OG Prediction Markets," 9 June 2026. crypto.com
- Kalshi via Business Wire, "Kalshi Onboards Its First Dedicated Institutional Market Maker," 2024. streetinsider.com
- Finance Magnates, "Prop Firm Jump Trading to Take Stakes in Kalshi and Polymarket: Report," 2026, citing Bloomberg. financemagnates.com
- Risk.net, "Will Kalshi and Polymarket win over prop shops? Don't bet on it." risk.net
- Dechert LLP, "The CFTC, Prediction Markets and Event Contracts: Setting the Stage," March 2026. docs.dechert.com
This article reflects the author's views and is for general information only. It is not investment, legal or tax advice, and not an offer or solicitation to buy or sell any financial instrument. Company names are used for identification only and do not imply any affiliation with or endorsement of DataNode.