Morgan Stanley has signed on as a strategic partner at the NEXTPredict summit in New York, where it will lead a panel on institutional capital on day two of the event. The move marks the first time a bank has put its name to a public-facing initiative in the prediction markets category, according to Pierre Lindh, co-founder and managing director of NEXT.io. The summit’s co-founder says around 90% of prediction market turnover is currently sports-related, and the sector’s valuations assume that changes.
Morgan Stanley’s panel at NEXTPredict
Stephen Grambling, who runs U.S. gaming, lodging and leisure research at Morgan Stanley, is representing the bank at the summit. He will be leading a panel focused on the chances, obstacles, and genuine questions institutions hold about prediction markets.
“Prediction markets are attracting greater attention across the financial system, but institutional participation will depend on a clear understanding of the opportunity, market structure and risks involved,” Grambling said.
The meeting will look at what could bring institutional money into the field and at the market structure, risk, and participation issues that remain standing in the way. Grambling’s experience speaks directly to this: he reports on gaming, a category the prediction market industry is actively trying to distance itself from.
NEXT.io’s relationship with Morgan Stanley runs deep: the two have collaborated for five years, and NEXT.io partners with the bank on its sports betting show in March. Grambling championed the summit internally and cleared it across departments, which Lindh says reflects relationships rather than taxonomy.
The valuation gap
The prediction market sector is running at a premium valuation that would make sense if its future looked like its present. Kalshi, a prediction market platform, has raised at a reported $40 billion. Polymarket closed a round at $20 billion. DraftKings, the closest listed comparison, is worth around $13 billion.
Lindh told Decrypt the current state of prediction markets does not support those figures. He said some 90% of liquidity and turnover sits in sports contracts, and a large share of users treat the venues as an alternative sportsbook.
“For those valuations to hold in the future, there has to be something else there,” Lindh said, with investors betting on prediction markets evolving to “become a more institutional tool,” enabling banks to hedge exposures they cannot hedge anywhere else.
“Prediction markets are attracting greater attention across the financial system, but institutional participation will depend on a clear understanding of the opportunity, market structure and risks involved.”
Banks are waiting on clarity
The prediction market industry is telling investors that its future is not what it is today. Lindh’s example of a conference organizer in New York losing a quarter’s revenue to a hurricane illustrates the logic: a business exposed to events outside its control has no conventional instrument to price that risk.
The internal workings of NEXT.io follow the same approach. The company employs market-style forecasts among staff to gauge whether the firm will reach its own commercial targets.
According to Lindh, research desks at banks want to know if market odds offer a truer picture of reality than polling. Other divisions are examining internal forecasting, or whether clients might be able to use these contracts to manage business risk.
Lindh added that what they are waiting for is regulatory clarity, and the large banks are holding off until state-level litigation resolves it.
What Morgan Stanley has done before
Morgan Stanley is not new to prediction markets. The bank took part in Kalshi’s $1 billion Series F in May, which valued the exchange at $22 billion. Its wealth management arm examined prediction markets in an April report that argued the sector’s growth had outpaced its regulatory framework.
More than 72 million Kalshi trades underpin a study of forecasting accuracy from Counterpoint Global, which was published in August. The research found that contract prices followed outcomes closely, though traders tended to underrate favorites and overrate long shots.
The bank’s involvement with Kalshi is notable. Morgan Stanley’s strategic partnership with NEXTPredict and its involvement in Kalshi’s fundraising suggest it sees the sector as a potentially valuable tool for its clients, even as it waits for the regulatory picture to clear.
The conference lineup
The NEXTPredict summit has expanded rapidly, and Grambling joins a growing list of confirmed speakers, bringing the total on the NEXTPredict lineup to 91 across five stages. The event now includes 15 speakers added recently. About 2,500 attendees are expected to attend.
The summit’s co-founder says the move is a sign of institutional interest that has been building for a while. JPMorgan’s Jamie Dimon told CBS in April that the bank was weighing an entry, while describing most of the activity as closer to gambling than investing and ruling out sports and politics outright.
David Solomon, Goldman Sachs’ chief executive, brought up meetings with the two largest operators during the firm’s January earnings call. No tangible results have yet come from those discussions, though.
Institutional interest in prediction markets
There has long been a clear appetite among institutions for prediction markets. The open issue is whether such enthusiasm ever gets turned into real money.
The prediction market space is betting that it will. The sector’s valuations assume the 90% sports turnover figure drops, and Kalshi’s reported $40 billion valuation and Polymarket’s $20 billion round reflect that assumption.
The internal example from Lindh — involving staff markets used to gauge whether NEXT.io will reach its goals — shows the logic is already being put into practice by prediction market operators themselves. They are wagering on their own futures based on the very change they are forecasting.
Valuation comparison
| Company | Valuation or Market Cap |
|---|---|
| Kalshi | Raised at a reported $40 billion |
| Polymarket | Closed a round at $20 billion |
| DraftKings | Worth around $13 billion |
The difference between the three cases is large. The industry’s stock prices depend on the assumption that the 90% figure for sales volume falls.
A major bank is backing the prediction market industry’s bet on its own future, through a strategic partnership between Morgan Stanley and NEXTPredict. Institutional interest is on display, even as banks hold back from entering the field until state-level litigation gets resolved.
Prediction markets face a clear choice: either keep their current shape, which looks much like a sportsbook, or move toward something more like the ordinary financial world. The question at stake is whether the market has what it takes to bring about that change.
Source material: “Morgan Stanley Joins NEXTPredict as Prediction Markets Bet on 'More Institutional' Play,” Decrypt.
Get the Notebook.
The day's best stories and every fresh verdict, in plain English, in your inbox by seven. One email a day, no more.