Morgan Stanley will serve as a strategic partner at the NEXTPredict summit in New York on Oct. 22 and 23, marking the first time a major bank has publicly endorsed a prediction market initiative, according to Pierre Lindh, co-founder and managing director of NEXT.io.
The bank will lead a panel on attracting institutional capital to the sector—a move that contrasts sharply with the cautious postures of JPMorgan and Goldman Sachs, which have held private meetings with operators but made no public commitments.
The thesis driving institutional interest is straightforward: prediction market valuations have decoupled from their operational reality. Kalshi closed funding at a $40 billion valuation, Polymarket at $20 billion, yet DraftKings—a sports betting company with actual institutional ownership—trades at $13 billion market cap. For these valuations to hold, the sector must migrate from consumer sports betting to institutional hedging.
Today's structural reality contradicts the bull case. Approximately 90 percent of prediction market liquidity and turnover concentrates in sports contracts, with users treating platforms as alternative sportsbooks rather than risk management tools, Lindh said.
The institutional use cases exist in theory. Research desks are testing whether market odds predict events more accurately than traditional polling. Internal prediction markets can forecast achievement of commercial targets. And prediction contracts could theoretically hedge business risks that conventional instruments do not price—such as revenue loss from a hurricane, Lindh cited as an example.
Yet the path from theory to capital deployment faces a structural barrier: regulatory uncertainty. Large banks are withholding full engagement until state-level litigation surrounding prediction markets clarifies their legal status.
Stephen Grambling, Morgan Stanley's head of U.S. gaming, lodging and leisure research, will lead the summit panel. He emphasized that institutional participation hinges on clear understanding of market structure and risk.
JPMorgan CEO Jamie Dimon has described most prediction market activity as gambling and ruled out sports and politics. Goldman Sachs CEO David Solomon disclosed meetings with leading operators during the firm's January earnings call but has taken no public position.
Morgan Stanley's participation signals a more direct engagement in the sector's evolution from consumer-facing sports betting to institutional risk management—a transition that valuation multiples assume but current trading volumes have yet to deliver.
