Galaxy Digital Eyes Polymarket and Kalshi Market Making Role

TLDR

• Galaxy Digital is in talks to become a liquidity provider for prediction market platforms Polymarket and Kalshi
• The two platforms have seen about $42.4 billion in combined trading volume and control roughly 97% of the global prediction market sector
• Polymarket is raising funds at a potential $12-15 billion valuation while Kalshi recently closed a $1 billion round at an $11 billion valuation
• Google announced on November 7 that it will show real-time odds from both platforms in Google Search and Google Finance
• Other major trading firms including Jump Trading and Susquehanna International Group are also entering the prediction market space

Galaxy Digital is exploring opportunities to provide liquidity for prediction market platforms Polymarket and Kalshi. The digital asset investment firm led by Mike Novogratz has started small-scale experiments with market making on these platforms.

Novogratz told Bloomberg in an interview that Galaxy Digital plans to offer broader liquidity services in the future. The company wants to act as a consistent counterparty on both platforms, which operate peer-to-peer markets where users trade binary yes or no contracts.

Prediction markets allow users to bet on outcomes of events ranging from politics to sports to economic data. Contract prices reflect the market-implied probability of specific outcomes. Both platforms require liquidity providers to maintain tight spreads, as every yes purchase needs someone to take the no side.

Polymarket and Kalshi have emerged as the dominant players in this space. Together they account for approximately 97% of global prediction market volume. The platforms have processed around $42.4 billion in cumulative trading activity.

Kalshi recently completed a $1 billion funding round at an $11 billion valuation. The round was led by Sequoia and CapitalG. Polymarket is preparing a new fundraising round that could value the company between $12 billion and $15 billion.

Growing Institutional Interest

The prediction market sector attracted widespread attention during the 2024 U.S. election cycle. Polymarket processed more than $3.5 billion in election-related trading volume. This figure exceeded trading activity on major sportsbooks during the same period.

While Polymarket initially led the market through decentralized operations, CFTC-regulated Kalshi has overtaken it in monthly volume since September. Both platforms have secured partnerships with major organizations including Google Finance and the National Hockey League.

Google announced on November 7 that it will display real-time odds from Polymarket and Kalshi in Google Search and Google Finance. This integration brings prediction market data to millions of mainstream users.

Other Wall Street firms are entering the space alongside Galaxy Digital. Jump Trading recently began market making on Kalshi. Susquehanna International Group was one of the first major trading firms to publicly confirm activity on the platform.

AQR’s Cliff Asness stated the firm is reviewing a potential sports betting expansion. Kalshi also operates its own internal market making desk to handle order flow during high-traffic periods.

Polymarket completed a $112 million purchase of CFTC-licensed QCEX earlier this year. The acquisition reopened access to U.S. users and resolved a Department of Justice inquiry. Kalshi holds a CFTC designation as a contract market and won court approvals for election-based contracts.

ICE, the parent company of the New York Stock Exchange, made a $2 billion strategic investment in Polymarket at a $9 billion valuation. Analysts at Bernstein noted that prediction markets are evolving beyond politics and sports into economics, culture, corporate activity and financial indicators.

Other crypto platforms are launching competing services. Gemini and CME Group both announced plans to enter the prediction market space. The platforms plan to expand into event categories that could compete with traditional finance sectors.

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