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berstein-prediction-markets-institutional-era-kalshiPrediction Markets News
Prediction markets are shifting from retail speculation venues into instruments used for institutional macro hedging, according to a May 4 research report by Bernstein. The firm said binary-outcome contracts, which resolve as straightforward yes-or-no results, give institutional investors a precise way to hedge against specific event risks, including tariffs, elections, and geopolitical developments.
The clearest evidence of that shift came on April 28, when the first bespoke institutional block trade was executed on Kalshi. Greenlight Commodities brokered the deal between a Houston, Texas-based environmental hedge fund and Jump Trading, which served as the liquidity provider. The contract was tied to the clearing price of California’s May carbon allowance auction.
Block Trades Open New Doors on Kalshi
A block trade is a large, privately negotiated transaction arranged between institutional counterparties outside standard open-market conditions. The Kalshi trade demonstrated how prediction market contracts can be structured around specific, non-standard event outcomes to meet institutional client needs.
Bernstein also citedClear Street’s partnership with Kalshi as a separate development. The arrangement gives institutional investors a regulated channel to trade event contracts alongside conventional financial products such as stocks and futures. The firm said the block trading infrastructure and bespoke contract design are the two factors most likely to accelerate institutionaladoption in the sector.
Despite that momentum, retail participants still account for the bulk of activity across prediction markets. A report by Bitget Wallet and Polymarket found that retail users generated more than 80% of the $25.7 billion in prediction market volumes recorded in March.
On the regulatory side, Kalshi operates as a federally regulated exchange under the Commodity Futures Trading Commission (CFTC). Polymarket received conditional approval in late 2025 to offer event contracts in the US through regulated channels. Bernstein projects that the sector could reach $1 trillion in size by the end of the decade if institutional participation continues to grow.
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