Millennium Management, the New York-based investment firm, is exploring ways to use prediction markets to inform its trading strategies. The firm is building tools for portfolio managers to utilize data from venues such as Polymarket and Kalshi Inc. as trading signals across traditional asset classes. While the firm is examining uses for the data, it is not currently trading prediction market contracts.
Some managers have expressed interest in using data tied to geopolitical, economic, and commodities outcomes. Spokespeople for Millennium and Kalshi declined to comment, while Polymarket did not respond. Prediction markets allow traders to place binary bets on real-world events like sports games, awards shows, and elections, attracting tens of billions of dollars in notional trading volume monthly.
Market makers such as Susquehanna International Group and Jump Trading were early entrants, while AQR Capital Management expanded its prediction markets-focused quantitative research team over the summer. Despite growing institutional interest, many Wall Street firms have avoided direct participation due to perceived legal, regulatory, and reputational issues. Kalshi and other companies face lawsuits in dozens of states over whether sports contracts should be regulated as gambling.
Alleged insider trading cases have also impacted high-profile markets. Kalshi and Polymarket's terms of service ban the use of inside information. Data partnerships are viewed as an introductory path to attract institutional capital beyond the retail-dominated customer base.
Much of the industry's volume stems from sports-related bets, though platforms are rapidly adding new contracts tied to gold, oil, and inflation gauges. Recent research suggests prediction market traders can sometimes be more accurate than institutional counterparts. A Wolfe Research report from April found Bettors speculating on corporate earnings exceedences are often correct above market norms.
A Federal Reserve Bank of New York report earlier this year showed Kalshi's forecasting of Fed policy and economic data was roughly consistent with professionals. Millennium raised a record $22 billion in new cash expanding trading operations and manages $97 billion in assets, up 8.1% through September.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing