Prediction markets are no longer just a retail betting story. The real fight now is over who controls liquidity, custody, regulation and institutional access.
Susquehanna International Group is treating event contracts like a market, not a novelty. That is the important signal from the latest round of activity around prediction markets, where firms built on options, crypto trading and derivatives infrastructure are moving into a space that used to look like a niche corner of online speculation.
The timing matters. Bloomberg's Odd Lots recently put Susquehanna's buildout in focus through an interview with Jeremy Maletz, the firm's head of macro trading and prediction markets, about why SIG is making markets on Kalshi and how a professional trader thinks about contracts tied to elections, policy, economics and sports. This is not media curiosity anymore. It is market structure.
Kalshi named Susquehanna Government Products as its first dedicated institutional market maker in April 2024, a move that helped give the CFTC-regulated exchange the kind of standing that newer financial venues need if they want to graduate from thin retail order books. In March 2026, BitGo and Susquehanna Crypto added another piece by launching institutional over-the-counter access to listed prediction-market contracts, allowing eligible clients to use dollars, stablecoins, bitcoin and other crypto as collateral for trades of at least $100,000.
Galaxy has now pushed the same idea further. On June 2, 2026, the firm launched an institutional OTC prediction-markets desk and said it executed a $10 million trade with crypto hedge fund Arca tied to the CLARITY Act, the digital-asset market-structure bill moving through Washington. As CoinDesk reported, the desk is aimed at institutions that want larger trade sizes than retail order books typically support.
That is the kind of trade that explains why these venues are attracting serious attention. A fund exposed to crypto regulation does not just want to read about legislative risk. It wants a way to price it, hedge it and trade around it.
Prediction markets are often described as places where prices reveal probabilities. That sounds clean, but it only works if the markets are deep enough for informed traders to participate without moving the price too much. Shallow markets can be entertaining and still be poor signals, because a small crowd can push a contract around through emotion, fandom or headline momentum.
Professional market makers help solve that problem by standing ready to buy and sell, narrowing spreads and absorbing flow. That makes it easier for larger investors to enter and exit positions. It can also make prices more useful to everyone else, because arbitrage and hedging become part of the market's daily discipline.
But there is another side to this. When firms like Susquehanna, Galaxy and BitGo enter the market, the average retail trader is no longer competing only with other users refreshing a website. They are facing professional pricing models, faster risk systems and balance sheets built for extracting small edges repeatedly. Better liquidity does not mean a kinder market. It means a more efficient one, and efficient markets tend to be unforgiving.
That is why the next phase of prediction markets will look less like a social product and more like a derivatives venue. Custody matters. Collateral matters. OTC execution matters. So does the ability to warehouse risk across related instruments, whether the underlying event is a Fed decision, a crypto bill, an election outcome or a sports result.
The legal fight is part of the market
The biggest obstacle is not whether traders understand these contracts. It is whether regulators can agree on what they are. The CFTC filed an April 28, 2026 lawsuit against Wisconsin after the state targeted Kalshi, Polymarket, Crypto.com, Robinhood and Coinbase over prediction-market activity. Earlier in 2026, federal officials also challenged Arizona, Connecticut and Illinois over state efforts to apply gambling rules to prediction platforms.
States see something familiar: betting. The CFTC sees event derivatives. The American Gaming Association and state regulators argue that sports and other event contracts can bypass consumer protections that apply to licensed gambling operators. Prediction-market companies argue that federally regulated exchanges should not be forced into a state-by-state sportsbook framework.
That dispute will shape who gets to build the next fintech platform. If the CFTC wins the jurisdictional argument, prediction markets could scale nationally in a way sports betting never could. A company with a federal derivatives license could offer contracts across states, bring in market makers, connect to brokers and let institutions trade around real-world outcomes without negotiating dozens of gaming regimes.
If the states win, the industry becomes more fragmented. Sports contracts may face the tightest pressure, while political, economic and crypto-policy markets could remain under different standards. That would make life harder for platforms trying to present prediction markets as one broad asset class.
There is also a trust problem that money alone cannot fix. Kalshi said in March 2026 that it would block athletes, coaches, officials and political candidates from markets they could influence, a response to growing scrutiny around insider trading. A market on whether something will happen is only credible if people believe the outcome cannot be gamed by the people trading it.
The practical takeaway is simple. Prediction markets are becoming financial infrastructure before the public has settled on what they should be for. Susquehanna's role shows that sophisticated liquidity is arriving. Galaxy's $10 million Arca trade shows institutions are finding real hedging uses. The legal battles will decide whether this becomes a regulated national market, a gambling-adjacent product with state limits, or something messier in between.
For investors and founders, the thing to watch is not whether prediction markets stay popular during the next news cycle. It is whether liquidity, custody and regulation can mature at the same time. If they can, event contracts may become a normal tool for pricing uncertainty. If they cannot, the market will keep growing, but with a question hanging over every trade.
Also read: Michael Saylor’s Bitcoin machine faces its first real stress test • China tells fund managers to fund innovation without chasing hype • The ECB rate outlook is tightening the funding window for risk assets
