Prediction market platform Kalshi processed more than $17 billion in various trading contracts in May, a record amount up more than 2500% from a year ago.
But while individuals drove Kalshi's astronomical growth over the past year, the company has focused on a new push in 2026: institutional adoption.
Less than a year after trading volumes started marching consistently higher in September, Kalshi — the largest prediction market platform in the U.S. — has made a series of moves in 2026 to increase its appeal to Wall Street. Those include rhetorical shifts, partnerships with brokerage platforms and teaming up with companies to develop necessary infrastructure.
And what's driving institutional interest? Hedging. Instead of having to game the financial market reactions to alleviate risks to different events, like an election or economic data report, a firm can place money on a binary contract related to that incident.
"Those are tradable assets now that people can directly trade upon, as opposed to trading on a derivative of those," said Andy Ross, head of institutional at Kalshi. "So you've got better hedging."
While retail's usage of the platform has led to sports-related event contracts to dominate trading volumes, sources told CNBC institutions are more interested in ones related to elections, weather incidents, macroeconomics and commodities.
In Kalshi's announcement of its $22 billion valuation on May 7, the company highlighted its institutional growth rather than its retail gains. Over the prior six months, institutional trading volumes were up more than 800%, the company said. However, Kalshi has yet to reveal what the dollar volumes are for the subgroup of traders, making it unclear how much that surge represents.
The outlook for institutional adoption is what's driving bullishness on the industry, according to Pierre Lindh. The founder of Next.io, an in-person and online events company focused on the gaming and now also prediction market industries, he said the expectation institutions will start trading on these markets en masse is behind the rising valuations of the private companies.
Kalshi was previously valued at $11 billion in December, meaning its valuation doubled in five months.
The institutional strategy
A coup for Kalshi's push into institutional trading came in April, when it completed the first block trade on a prediction market platform. The transaction was between a Texas environmental hedge fund and a market maker on a contract related to California carbon allowances.
Interest from other institutions has grown since the trade, according to John Conlon, director at Greenlight Commodities. Greenlight was the broker for the first block trade.
"There's been a bunch of other excitement from people who didn't even want to have the conversation three to six months ago, to now going, 'Okay, send me some literature,'" he said. "People go, 'You have a proof of concept now.'"
Before that, though, Kalshi started laying the groundwork for institutional adoption.
In February, Kalshi beefed up its internal surveillance and enforcement work through a partnership with Solidus Labs, a risk-monitoring technology company. Observers of prediction markets widely agree that insider trading worries on the platforms have to be quelled to gain institutional attention.
The same month, the company partnered with Tradeweb Markets to expand access to Kalshi's data, giving firms easy ways to view information related to its event contracts. Ross said data is a key entry point to get interest from institutions by showing the value of Kalshi's markets to them in the platforms they're familiar with.
Then, in March, Kalshi announced it partnered with Fidelity National Information Service — a financial technology company — to develop programming to clear trades on prediction markets. Tito Shirley, head of middle office solutions at FIS, said that the program partially resulted from clients' interest.
"We've started to get a lot more demand from both new entrants and existing customers who are looking to expand their derivatives clearing capabilities to include prediction markets and specifically Kalshi," he said.
Kalshi is also now tradable on more brokerage platforms. Clear Street, a broker to institutional traders, and Interactive Brokers, which services both retail and institutional investors, both in May announced they were integrating some Kalshi contracts onto their platforms.
Little guy squeezed out?
There is skepticism from some on institutional participation in prediction market trading.
Charles Schwab, which also services both retail and institutional investors, CEO Rick Wurster in the company's April earnings call said that they haven't seen high demand from their traders for prediction markets.
"When we ask clients what they're looking for, prediction markets is very low on the list," he said. However, he added that he still expects at some point they'll integrate the markets into their platforms.
Brian Jacobs, portfolio manager at Aptus Capital Advisors, warned that fees that prediction market platforms charge for transactions could limit any returns for large investors. Ross noted that Kalshi has waived fees for block trade transactions of 100,000 or more contracts executed, and a regulatory filing shows that the company will offer that rebate until September 1.
And then there's the fact that institutions have access to a wide array of information that an individual retail trader may not. Jacobs thinks that will give institutions an advantage temporarily, only until other major firms start playing in the markets too.
"You're competing against other institutions," he said. "Even if you're more informed than retail today, going forward, are you going to continue to be more informed than other institutions in the space?"
But would that mean that individuals, the group that drove Kalshi's rise, gets squeezed out by institutions winning thanks to their breadth of knowledge?
Ross doesn't think so. In fact, he thinks institutional trading will reward the retail traders who win even more thanks to increased liquidity in the market.
"If you're a smart predictor and you continue to be right, and there's more people who are predicting… you'll just continue to be more and more right and make more and more money," he said.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
Facts Only
Kalshi processed over $17 billion in trading contracts in May 2026.
This represents a 2,500% increase from May 2025.
Kalshi is the largest prediction market platform in the U.S.
Institutional trading volumes on Kalshi rose over 800% in the six months prior to May 2026.
Kalshi completed its first block trade in April 2026, involving a Texas environmental hedge fund and a market maker.
The block trade was related to California carbon allowances.
Kalshi partnered with Solidus Labs in February 2026 to enhance surveillance and enforcement.
Kalshi partnered with Tradeweb Markets in February 2026 to expand data access.
Kalshi partnered with Fidelity National Information Service (FIS) in March 2026 to develop trade-clearing infrastructure.
Clear Street and Interactive Brokers integrated Kalshi contracts onto their platforms in May 2026.
Kalshi’s valuation reached $22 billion on May 7, 2026, doubling from $11 billion in December 2025.
Kalshi has waived fees for block trades of 100,000 or more contracts until September 1, 2026.
Executive Summary
Full Take
The narrative around Kalshi’s shift toward institutional adoption presents a compelling case for the maturation of prediction markets, but it also invites scrutiny of the underlying dynamics. At its strongest, the argument highlights how prediction markets offer institutions a more direct and efficient way to hedge risks—such as election outcomes or macroeconomic events—compared to traditional derivatives. The platform’s strategic partnerships, regulatory compliance efforts, and infrastructure upgrades suggest a deliberate push to legitimize prediction markets in the eyes of Wall Street. However, the pattern of emphasizing institutional growth while downplaying retail contributions raises questions about accessibility and fairness. The article notes that institutions may have informational advantages over retail traders, at least initially, which could create an uneven playing field. This echoes broader concerns about financialization, where institutional players often dominate markets, potentially crowding out smaller participants.
The root cause of this narrative appears to be the broader trend of financial innovation seeking institutional validation. Prediction markets, once a niche tool for retail speculation, are now being repositioned as sophisticated risk-management instruments. Yet, the article’s focus on Kalshi’s valuation and institutional adoption—without concrete dollar figures for institutional trading volumes—leaves room for skepticism about whether this growth is sustainable or merely speculative. The claim that retail traders will benefit from increased liquidity is plausible but unproven, as historical patterns in financial markets often show that institutional dominance can marginalize smaller players.
Key questions remain: Will prediction markets truly democratize risk management, or will they become another domain where institutional capital holds the upper hand? How might regulatory scrutiny evolve as these markets grow, particularly around insider trading and market manipulation? And what safeguards are needed to ensure that retail traders aren’t systematically disadvantaged?
Counterstrike scan: If this were part of a coordinated influence campaign, the playbook would likely involve exaggerating institutional adoption to attract more capital while downplaying risks to retail participants. However, the article presents a balanced view, acknowledging both the potential benefits and skepticism around institutional dominance. No structural alignment with manipulative patterns is detected.
Patterns detected: none
Sentinel — Human
The article displays the complex, multi-perspective narrative structure and specific, grounded details typical of human-written financial reporting, though the polish suggests expert editing.