Prediction markets enter institutional era after first Kalshi block trade
Prediction markets are moving closer to institutional finance as large investors seek direct ways to trade event risk, according to a May 4 Bernstein report. Bernstein says Kalshis first bespoke block trade could attract institutions seeking direct event-risk exposure.Greenlight brokered the Kalshi trade, with Jump Trading providing liquidity for a carbon allowance contract.Retail still drives prediction markets, with Polymarket and Bitget reporting $25.7B in March volume. The firm said these markets can help investors track outcomes tied to tariffs, elections, policy decisions and geopolitics through clear yes-or-no contracts. Bernstein pointed to Kalshi‘s first bespoke institutional block trade as a key step. A block trade is a large private deal arranged between market players. In this case, the contract was built around the clearing price of California’s May carbon allowance auction. Kalshi trade draws institutional attention The Kalshi deal was brokered by Greenlight Commodities. It involved a Houston-based environmental hedge fund, with Jump Trading acting as the liquidity provider. The structure showed how prediction markets can serve a specific hedging need, rather than only broad retail speculation. “We believe the introduction of block trading and bespoke contracts could expand participation from institutional investors seeking targeted exposure to event risks,” Bernstein analysts wrote. The report framed custom contracts