Polymarket Follows Kalshi With In-House Trading Desk

According to people familiar with discussions cited by Bloomberg, Polymarket has begun sounding out professional bettors and traders — a signal it wants to build an in-house market-making desk capable of quoting prices and absorbing risk directly rather than relying solely on external market makers.

Why Would an Exchange Trade on Its Own Platform?

Liquidity has become the defining challenge for prediction markets.

With user activity rising, contracts ranging from election outcomes to weather forecasts need deeper order books to function efficiently. That has prompted some exchanges to adopt the “be your own liquidity provider” approach.

Kalshi, Polymarket’s closest competitor, already runs a trading arm to seed markets with bids and offers. The model has not been universally welcomed — a class-action claim filed last month accused Kalshi of setting prices in ways unfavorable to customers. Nevertheless, the practice is spreading as platforms scramble to keep pace.

Externally, firms such as Susquehanna International Group have also stepped in as liquidity providers, illustrating that prediction markets now draw interest from sophisticated trading houses.

Regulatory History Is Still Casting a Shadow

Polymarket’s strategic shift comes shortly after it resolved a 2022 enforcement case with the Commodity Futures Trading Commission, which resulted in a $1.4 million penalty and restrictions on U.S. access.

The company is now re-expanding domestically after receiving permission to serve U.S. users again — a delicate backdrop in which launching a trading desk invites scrutiny.

The rapid rise of prediction markets has attracted commentary from mainstream finance leaders.

At The New York Times’ DealBook Summit, Coinbase CEO Brian Armstrong offered an unconventional take: he suggested that having insiders — people with privileged or expert knowledge — participate directly can actually improve outcome forecasting, since markets exist to extract accurate information.

By contrast, BlackRock chief Larry Fink dismissed the space as largely irrelevant to long-term investing, likening constant betting activity to wagering on every play in a football match — entertaining, perhaps, but not meaningful to those planning decades ahead.

A Lot of Money Is Moving Regardless of the Debate

Philosophical disagreement has not slowed adoption. Across the three biggest platforms, trading volume in the third quarter of 2024 jumped from $463 million to $3.1 billion, a 565% surge.

That kind of liquidity explosion explains why exchanges are racing to control — and possibly influence — their own markets.

Whether this evolution makes prediction markets fairer or more conflicted remains to be seen, but momentum suggests the industry is moving into a new phase where platforms are no longer just referees, but players on the field.