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necessarily for a marketplace for them to trade on, but for the data that will be generated.”
Building on this, in January 2026, Coalition Greenwich released its‘ Prediction markets: It’ s all about the data’ report, detailing how 60 % of respondents to the study – which included buy- and sell-side traders, market structure analysts, business heads, market data experts, fintech providers and other professionals- are looking at these markets as a new source of data for speculation, specifically to initially provide support traders by helping them to generate alpha through direct trading, or gather insights based off market outcomes.
In addition, the study also went further to highlight that 43 % of respondents currently believe that prediction markets will offer a new source of alternative market data for hedging, while a third also built on this, to suggest that these platforms will provide new hedging approaches which differ from traditional markets.
As Forster puts it:“ Data is the blood of the industry. With the data generated from prediction markets, the exchanges can then go and resell this. The key thing is not necessarily having new instruments to trade, speculate on, or to capture alpha, but it’ s about absorbing and consuming these additional alternative data feeds.”
Despite this, the real advantage for institutional participants will depend on how easily this data can be integrated into existing workflows and operationalised. For many, including Barrett, this is not a quick fix for the industry, and is something that will likely take some time to be fully established.
“ At the moment, the data is useful for firms if they do a lot of manual curation and analysis, but I think it ' s going to take a few years before you can just buy a market data feed from these sorts of markets and plug it into your business,” Barrett added.
Keeping a card up your sleeve According to the recent Coalition Greenwich study, 19 % of the US-based market structure specialists surveyed felt that prediction markets encourage gambling, and have the capacity to produce negative effects on the industry, such as introducing additional risk noise, rather than actionable signals.
Questions around the interplay between prediction market trading and gambling have frequently come coupled with rising debate around
“ Institutions are participating today, albeit still in small size, through ringfenced allocations, often via proxies or observation rather than direct balance-sheet risk.”
ROB FLATLEY, CHIEF EXECUTIVE, TS IMAGINE
this growing industry sector, and have, as a result, also brought the topic of regulation, and whether this is needed, in to play.
As previously discussed, a lack of regulatory reckoning may be deterring some participants, particularly the buy-side, from venturing into prediction markets, and an absence of regulation appears to be causing a fog to descend on many who are uncertain of where the boundaries lie between trading and betting.
“ What we ' re seeing is a split between something akin to gambling and investing,” said Barrett.“ It ' s a different form of financial activity from investing into your pension for a payoff in 25 years’ time. But is it just gambling?”
Regulation has long existed around prediction markets, with the US Congress granting the Commodity Futures Trading Commission( CFTC) exclusive jurisdiction over all commodity derivatives markets, including prediction markets – an authority which the commission reaffirmed publicly in February this year, following several lawsuits filed to CFTC exchanges to regulate or restrict access to event-based contracts.
34 // TheTRADE // Q1 2026