Prime Brokers Bet on Prediction Markets — but US Lawmakers Are Already Pushing Back

After attracting retail and institutional interest, prediction markets are now attracting attention from a foundational part of Wall Street.

Major prime brokers are moving to give clients access to event-based bets on the prediction market platform Kalshi.

Wall Street’s Prime Brokers Make Their Move

According to Bloomberg, Clear Street, a prime broker serving hedge funds and sophisticated traders, is expecting to clear its first trade on Kalshi later this month. The firm plans to offer it more broadly later in 2026, according to its chief executive officer, Ed Tilly.

Marex Group, a London-based broker, is also preparing to follow suit. Thomas Texier, the firm’s global clearing head, noted growing interest from major financial institutions exploring ways to gain exposure to prediction markets.

“Over the last few weeks, we’ve seen very large hedge funds coming to us and saying, ‘Can you give us access to these markets?’” Texier said.

The prime brokerage push is significant. These firms form the backbone of institutional trading, providing services such as clearing, lending, and execution. Their involvement could lower the barrier for hedge funds seeking exposure to event contracts.

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Prediction Market Open Interest Breaks Records

The development comes as prediction markets continue to see record growth. According to data from Artemis, prediction market open interest reached $1.2 billion on a weekly basis, marking a new all-time high.

Furthermore, weekly spot volume has grown nearly 15x over the past year, suggesting strong demand.

Interest in prediction markets among Gen Z continues to rise, driven partly by broader economic pressures and a widening income gap. Crypto firms like Coinbase, Gemini, and Crypto.com have also dipped their toes into the sector.

Notably, asset managers have taken steps to capitalize on the growth. BeInCrypto reported last month that firms like Bitwise and Roundhill have filed to register ETFs tied to event contracts on the outcome of the US elections.

The expansion of prediction markets has not gone unnoticed by US lawmakers. US Senator Chris Murphy has announced that he is developing a bill to ban what he describes as “corrupt and destabilizing prediction markets.”

His concern centers on scenarios where insiders could exploit non-public knowledge for personal gain. Two Democratic lawmakers have also proposed a bill to prohibit prediction market contracts tied to war, assassination, terrorism, or an individual’s death.

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The tension between institutional adoption and regulatory scrutiny may define the prediction market sector through 2026. With prime brokers now entering the space and lawmakers drafting the guardrails, the next few months could shape whether event contracts become a permanent fixture of Wall Street portfolios.