[ I N D E P T H ] these issues should be treated as employment policy matters rather than unique regulatory challenges.
“ Prediction markets are really interesting and at a base level, they can be really good ways of drawing people ' s knowledge in and putting it in a forum that the rest of us can use. That, however, also leads to the issue that maybe people are taking knowledge that they ' re not supposed to be making public through their prediction market bets. Fundamentally, that ' s an issue that relates to a person ' s relationship with their employer. If that ' s what they feel, employers should have rules saying you can ' t trade on prediction markets.”
Similarly, the value of prediction markets in the eyes of regulators was also recognised in a recent paper published by the Federal Reserve, which evaluates the accuracy of prediction marketimplied forecasts from Kalshi. As a result of the study, the paper concluded that“ Kalshi markets provide a high-frequency, continuously updated, distributionally rich benchmark that is valuable to both researchers and policymakers,” indicating the regulatory backing garnered by prediction markets,
“ 2026 is going to be the year of building and 2027 is going to be the year of making these things work at scale and seeing what the institutional inflow will be.”
MATT BARRETT, CHIEF EXECUTIVE, ADAPTIVE
amid uncertainties currently bouncing around the industry.
While questions remain around where the boundaries blur between trading and gambling, and what role regulation should assume within all this, growing institutional interest appears to be highlighting that prediction markets being recognised for the value they can provide to the markets. However, this trajectory may depend on whether regulators can strike the right balance between protecting market integrity and allowing the mechanisms that generate these forecasting signals to develop.
The wave of the future? As interest around prediction markets continues to grow, the industry is now asking how market structure will evolve with this. Over the course of 2026, several events, such as the upcoming FIFA World Cup beginning in June this year are set to see interest in these markets growing even more, at least from a retail perspective.
However, as many industry experts have highlighted, ensuring the correct infrastructure is in place will be key to prediction markets’ success from an institutional standpoint.
As Flatley highlighted:“ Institutions are participating today, albeit still in small size, through ring-fenced allocations, often via proxies or observation rather than direct balancesheet risk. This is classic pre-infrastructure adoption. Institutional adoption will not be blocked by belief, regulation, or demand, but by the absence of institutional risk plumbing.
“ We need purpose-built markets models for binary event contracts, cross-margining agreements with traditional CCPs, standardised market data integration, and operational infrastructure for event-driven settlement.
“ Once event markets clear, margin, and fail gracefully like any other derivative, they will be treated as exactly that.”
For now, we appear to be at the early stages of this boom, and for many, 2026 will serve as the building block year for scaling these markets at a large institutional scale.
Reflecting on this, Barrett summarised:“ Right now, we ' re in the early stages of this whole space maturing. 2026 is going to be the year of building and 2027 is going to be the year of making these things work at scale and seeing what the institutional inflow will be.”
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