Galaxy Digital sets its sights on prediction markets! Polymarket and Kalshi integrate Google data

Mike Novogratz’s Galaxy Digital is in talks with prediction market platforms Polymarket and Kalshi to become a liquidity provider, planning to act as a market maker on the platforms by regularly posting buy and sell quotes to deepen trading. Google Finance will display data from Polymarket and Kalshi in the coming weeks.

Galaxy Digital Steps Into Prediction Market Making

(Source: Polymarket)

Galaxy has been committed to providing crypto infrastructure and services to institutional clients, and will serve as a market maker on prediction market platforms, regularly posting buy and sell quotes to deepen trading. In a recent interview with Bloomberg, Novogratz stated that the company “is doing some small-scale market-making experiments on prediction markets, but I think eventually you’ll see us providing broader liquidity.”

This statement is significant for both Polymarket and Kalshi. Liquidity is the lifeblood of any trading market, and professional market makers can greatly enhance market depth. When a Wall Street giant like Galaxy is willing to provide market-making services, it signals that prediction markets have evolved from niche experiments to a scale capable of attracting mainstream financial institutions.

The role of a market maker is to simultaneously provide buy and sell quotes in the market, earning the bid-ask spread as profit, while providing continuous liquidity. Unlike traditional sports betting companies (which take positions opposite to their customers), Polymarket and Kalshi mainly use a peer-to-peer trading model. To buy “Yes” in the market, there must be someone willing to hold the corresponding “No” position, making liquidity providers and active market makers crucial for user experience.

Without market makers, prediction markets may face liquidity shortages. If a market lacks enough counterparties, users may not be able to transact at favorable prices, or large orders could cause severe price swings. The involvement of professional market makers can narrow spreads, improve execution efficiency, and enable traders to enter and exit positions more smoothly. This liquidity improvement will attract more users, creating a virtuous cycle.

Both platforms have launched incentive programs to reward participants who post orders in specific markets. However, retail market makers have limited capacity and resources and cannot provide stable and large-scale liquidity. As a professional financial institution, Galaxy Digital has advanced trading systems, ample capital, and extensive market-making experience—their participation will be a qualitative leap for prediction markets.

Prediction Markets Move from Niche Experiment to Mainstream Finance

Prediction markets have grown rapidly in recent months, offering binary contracts tied to outcomes of elections, sporting events, and major economic events. Traders buy “Yes” or “No” shares on specific questions, with prices reflecting the market’s implied probability of an outcome. This mechanism makes prediction markets a unique information aggregation tool, often predicting events more accurately than traditional polls.

Since the last U.S. presidential election, interest in betting on real-world outcomes has surged, with traders viewing prediction markets both as speculative channels and informal opinion polls. Polymarket, in particular, performed outstandingly during the 2024 U.S. presidential election, with its forecasts coming closer to the final result than many traditional polling organizations, garnering widespread attention and recognition for prediction markets.

Liquidity provided by companies like Galaxy will help large trades be executed smoothly without causing severe price swings. Such professional liquidity services are a key step toward prediction market maturity. When institutional investors want to place large bets on prediction markets, they need to ensure they can transact quickly at reasonable prices, without suffering slippage due to insufficient liquidity.

Major tech firms are also helping the industry go mainstream. Google Finance recently announced it will begin displaying real-time data from Polymarket and Kalshi in the coming weeks, allowing users to look up information about future events and see how the public values the odds. This mainstream media integration will greatly enhance the visibility and accessibility of prediction markets. For both crypto natives and traditional investors, this visibility could make prediction markets feel less like a niche experiment and more like a regular part of the market landscape.

Polymarket US Market Testing and Compliance Challenges

Polymarket initially built up trading volume primarily outside the US, but this month began live testing of its US exchange. The platform has quietly brought in a small group of users and started matching real trades, preparing for a full launch into the US domestic betting market. This move shows Polymarket’s focus on the US market and its confidence in improving regulatory conditions.

The regulatory environment remains unclear. Some US states consider prediction markets a form of gambling, while the Commodity Futures Trading Commission (CFTC), which regulates event contracts at the federal level, has so far not intervened to shut down prediction market activity on platforms like Polymarket and Kalshi. This regulatory gray zone is both an opportunity and a risk.

From a compliance perspective, Polymarket and Kalshi have adopted different strategies. Kalshi is the first prediction market platform to be approved by the CFTC and operates legally within the US. This compliance advantage gives it a favorable position when partnering with traditional financial institutions. While Polymarket has built a large user base outside the US, the compliance of its US business is still being explored.

Galaxy Digital’s decision to negotiate with both platforms signals its optimism for the overall prediction market track, rather than betting on a single platform. This diversified strategy can both spread risk and enable arbitrage between different platforms. If Polymarket and Kalshi price the same event differently, market makers can conduct cross-platform arbitrage while providing liquidity to both markets.

Large Trading Firms Accelerate Industry Maturity

For years, event markets were too small to attract large trading firms. Susquehanna International Group is one of the few companies to publicly acknowledge serving as a market maker on Kalshi. As one of the world’s largest options trading firms, Susquehanna brings professional market-making technology and ample capital to prediction markets.

Some exchanges also have internal market-making entities to meet demand. Kalshi operates a division called Kalshi Trading, which trades directly with clients. The company says the trading division operates completely independently and does not have access to non-public information generated by the exchange. While this internal market-making mechanism can provide basic liquidity, independent third-party market makers can provide deeper liquidity and tighter spreads.

With the entry of tech platforms and liquidity providers, the industry is maturing. Galaxy Digital’s participation is an important step in the mainstreaming of prediction markets. As more professional institutions like Galaxy are willing to provide market-making services, the trading experience of prediction markets will approach that of traditional financial markets, attracting more institutional investors and high-net-worth individuals.

Three Signs Prediction Markets Are Going Mainstream

Wall Street Institutions Entering: Professional trading firms like Galaxy and Susquehanna provide market-making services

Tech Giants Integrating: Google Finance displays real-time data from Polymarket and Kalshi

Regulatory Attitudes Shifting: CFTC approves Kalshi operations, showing regulatory openness

Traders buy “Yes” or “No” shares on specific questions, with prices reflecting the market’s implied probability of an outcome. This market mechanism has proven to efficiently aggregate dispersed information, sometimes delivering more accurate forecasts than experts or traditional polls. As liquidity improves and participation increases, the information aggregation efficiency of prediction markets will further improve.

Since the last U.S. presidential election, interest in betting on real-world outcomes has grown steadily. This interest comes not only from speculators but also from researchers, media, and policymakers, who view prediction markets as tools for understanding public expectations and assessing event probabilities. Galaxy Digital’s participation will inject professionalism and scale into this fast-developing sector, propelling prediction markets from the experimental stage toward maturity as a financial product.