Institutional investors are entering prediction markets as block trades, custom contracts and US regulatory shifts reshape a sector still dominated by retail users.
Prediction markets are evolving from retail speculation platforms into institutional-grade financial instruments, driven by demand for precise macro hedging and clearly defined binary outcomes, according to a May 4 report by Bernstein.
The report highlights why institutional investors may find these markets attractive — namely, they allow users to hedge specific event risks, such as tariffs, elections and geopolitical developments, using contracts that resolve to simple yes-or-no outcomes.
Bernstein pointed to the first bespoke institutional block trade executed on Kalshi last week as a key milestone. A block trade refers to a privately negotiated, large transaction typically arranged between institutional counterparties.
