Mike Novogratz’s Galaxy Digital is in talks to provide liquidity for leading prediction market platforms Polymarket and Kalshi, a move that signals a significant step toward the professionalization of this fast-growing sector.
In a recent interview, Novogratz confirmed that his firm is already “doing some small-scale experimenting with market-making on prediction markets”, with the explicit goal of eventually “providing broader liquidity” on these platforms. This initiative would see Galaxy Digital, a firm with a strong track record in crypto infrastructure for institutional clients, acting as a market maker. By continuously quoting both buy and sell prices, Galaxy would help to narrow the difference between those prices (the spread) and create a smoother trading experience for all participants.
The Rush to Build Financial Infraestructure
Galaxy Digital’s interest is a clear indicator that prediction markets are shedding their niche status and becoming a serious new frontier that combines information with finance. These platforms, which allow users to trade contracts on the outcomes of real-world events in politics, sports, and economics, have seen explosive growth. The two dominant players, Polymarket and Kalshi, have already processed a staggering cumulative volume of around $42.4 billion.
This surge in activity has not gone unnoticed by other major financial firms. Jump Trading has begun market-making on Kalshi, and Susquehanna International Group has also been an active participant. Cliff Asness of AQR Capital Management has similarly expressed interest in expanding into the space. This rush of professional capital is transforming prediction markets from a peer-to-peer betting arena into a more formalized financial ecosystem.
The Catalyst of Regulatory Progress
A key enabler for this institutional embrace has been regulatory progress. Kalshi operates as a CFTC-designated contract market, providing a regulated framework that legitimizes it in the eyes of professional traders. After facing regulatory scrutiny in the U.S. in 2022, Polymarket has taken major steps to re-enter the market. The company acquired a CFTC-regulated exchange, QCX, for $112 million, a move that resolved a Department of Justice investigation and paves the way for its planned return to the U.S.. This regulatory clarity is lowering the barrier for large, risk-averse institutional capital.
A Mainstream Moment
The momentum behind prediction markets is being amplified by their integration into mainstream platforms. In a significant endorsement, Google recently announced it will display real-time odds from both Polymarket and Kalshi directly in its Google Search and Google Finance results. This brings crowd-sourced forecasts to millions of everyday users and underscores the value of these markets as powerful information tools. As analysts at Bernstein noted, prediction markets are “evolving to be broader information markets”, with demand expanding well beyond politics into economics and corporate activity.
The entry of Galaxy Digital as a potential liquidity provider marks a pivotal moment in the maturation of prediction markets. By providing deeper, more stable liquidity, Galaxy and other institutional players can help reduce price volatility and improve the quality of the market’s aggregated signal. This professionalization, fueled by regulatory wins and mainstream adoption, is building a new, data-rich layer of financial infrastructure that is quickly moving from the fringes to the center of the information economy.
