Wall Street accelerates prediction market deployment: Hedge funds rush to enter Kalshi, institutional funds may flood in on a large scale

On March 12, news reports indicate that as prediction markets have rapidly developed over the past year, several major U.S. brokerages are pushing Wall Street funds into this sector. According to media reports, financial institutions such as Clear Street and Marex Group Plc, which provide services to hedge funds, plan to allow clients to participate in event trading on the prediction market platform Kalshi. This move is seen as an important step for institutional capital to enter the prediction market.

Clear Street CEO Ed Tilly stated that the company expects to complete its first Kalshi-related transaction settlement by the end of March. The firm is currently valued at over $12 billion. Meanwhile, Marex Group, valued at approximately $2.6 billion, also plans to open similar services to clients in the coming months. Thomas Texier, Head of Global Clearing at Marex, noted that several large hedge funds have recently been actively consulting on ways to access prediction markets, hoping to use these markets for risk hedging and strategic trading.

Kalshi CEO Tarek Mansour believes that by 2026, institutional adoption of prediction markets will increase significantly. He stated that these markets not only provide investors with insights into the probabilities of future events but also serve as tools for risk management and yield strategies. Currently, several mainstream media outlets have begun citing Kalshi market data alongside traditional financial market quotes, indicating its growing influence.

However, prediction markets remain in a regulatory gray area. Clear Street management has stated that they will remain cautious before officially expanding their business. The main controversies facing the industry include whether sports-related markets constitute legal gambling and whether broad event markets could involve insider trading risks.

Meanwhile, U.S. financial regulators are also discussing regulatory frameworks for this sector. The Commodity Futures Trading Commission (CFTC) believes it has primary oversight authority, while the Securities and Exchange Commission (SEC) has indicated it will play a role in relevant market rules. Nasdaq CEO Adena Friedman recently stated that clear and unified regulatory rules will help protect investors and promote healthy development of prediction markets. Industry experts generally believe that once regulatory clarity is achieved, prediction markets could become a new growth track for Wall Street.