Institutional interest in prediction markets has not been in doubt for a while. JPMorgan's Jamie Dimon told CBS in April that the bank was weighing an entry, while describing most of the activity as closer to gambling than investing and ruling out sports and politics outright. Goldman Sachs chief executive David Solomon had used the firm's January earnings call to disclose meetings with both of the largest operators. Thus far, however, there has been little in the way of concrete progress to speak of.
Morgan Stanley is stepping into the breach, taking a formal role at the NEXTPredict summit in New York on October 22 and 23 as a strategic partner and leading a day-two panel on institutional capital. Pierre Lindh, co-founder and managing director of NEXT.io, says it is the first bank to put its name to a public-facing initiative in the category.
Day 2 plan: Find the Morgan Stanley Institutional & Capital panel.
They’re assembling and leading the panel around the opportunities, roadblocks + real questions institutions have about prediction markets.
See the full agenda → https://t.co/jDOHCP8LmR pic.twitter.com/3K0j13DRyM
The session will look at what might draw institutional money into the category and the market structure, risk and participation problems still in the way. Leading it is Stephen Grambling, Morgan Stanley's head of U.S. gaming, lodging and leisure research.
"Prediction markets are attracting greater attention across the financial system, but institutional participation will depend on a clear understanding of the opportunity, market structure and risks involved," Grambling said.
Valuations in the sector underscore the urgency, with Kalshi raising at a reported $40 billion and Polymarket closing a round at $20 billion . DraftKings, the closest listed comparison, is worth around $13 billion .
“The story that the prediction market industry is telling investors now is that the future of the prediction market space is not what the prediction market space is today,” Lindh told Decrypt . Some 90% of liquidity and turnover currently sits in sports contracts, Lindh said, and a large share of users treat the venues as an alternative sportsbook. “For those valuations to hold in the future, there has to be something else there,” he said, with investors betting on prediction markets evolving to “become a more institutional tool,” enabling banks to hedge exposures they cannot hedge anywhere else.
Lindh gave the example of a business exposed to events outside its control. A conference organizer in New York can do everything right and still lose a quarter's revenue to a hurricane, a risk no conventional instrument prices well. NEXT.io is running the same logic internally, he said, using markets among staff to forecast whether the company will hit its own commercial targets.
Banks want different things from it. Research desks are interested in whether market odds are a better read on the world than polling, Lindh said. Others are looking at internal forecasting, or whether clients could use the contracts to hedge business risk.
What they are waiting for is regulatory clarity, Lindh added, with the large banks holding off until state-level litigation resolves.
Morgan Stanley's representative at NEXTPredict has a telling background; Grambling covers gaming, which is precisely the classification the industry is trying to escape. Lindh argues that this reflects relationships rather than taxonomy, noting that NEXT.io has worked with Morgan Stanley for five years, partners with the bank on its sports betting show in March, and Grambling championed the summit internally and cleared it across departments.
The bank is not new to the sector. It took part in Kalshi's $1 billion Series F in May, which valued the exchange at $22 billion . Its wealth management arm examined prediction markets in an April report that argued the sector's growth had outpaced its regulatory framework. In August, Counterpoint Global published a study of forecasting accuracy drawing on more than 72 million Kalshi trades, finding that contract prices tracked outcomes closely while traders slightly underrated favorites and overrated long shots.
Grambling is one of 15 speakers added recently, taking the confirmed NEXTPredict lineup to 91 across five stages, with about 2,500 attendees expected.