Morgan Stanley becomes first major bank to publicly join prediction markets

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Wall Street’s biggest banks have spent months circling prediction markets without fully committing. Now Morgan Stanley is stepping past the sidelines, formally joining October’s NEXTPredict summit in New York as a strategic partner and putting one of its senior analysts in front of a room full of investors to talk about institutional capital. The move marks one of the clearest signs yet that Morgan Stanley prediction markets involvement is shifting from quiet due diligence to public engagement, even as the industry it’s courting still leans overwhelmingly on sports betting for its revenue.

Key takeaways

Morgan Stanley joined the NEXTPredict summit in New York, taking place October 22 and 23, as a strategic partner.
Stephen Grambling, the bank’s head of U.S. gaming, lodging and leisure research, will lead a panel on institutional capital in prediction markets.
About 90% of prediction market turnover currently sits in sports contracts, according to NEXT.io co-founder Pierre Lindh.
Kalshi and Polymarket carry reported valuations of roughly $40 billion and $20 billion, dwarfing DraftKings’ listed valuation of about $13 billion.
Morgan Stanley already backed Kalshi’s $1 billion Series F round in May and has studied the exchange’s forecasting accuracy through Counterpoint Global.

Morgan Stanley’s Entry Into Prediction Markets via NEXTPredict

Morgan Stanley‘s arrival at NEXTPredict answers a question that has hung over the industry for most of this year: which bank would be first to attach its name publicly to the category. According to Pierre Lindh, co-founder and managing director of NEXT.io, Morgan Stanley is the first bank to take a formal, public-facing role in a prediction markets initiative of this kind.

The bank isn’t just sponsoring a booth. It’s leading a day-two panel dedicated to institutional capital prediction markets discussions — specifically, what would need to happen for large financial institutions to move real money into the space, and what market structure, risk and participation hurdles still stand in the way. Leading that session is Stephen Grambling, Morgan Stanley’s head of U.S. gaming, lodging and leisure research — notably the same desk that already covers sportsbooks.

“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.

Lindh frames Grambling’s involvement as a matter of relationships rather than strict categorization. NEXT.io has worked with Morgan Stanley for five years and partners with the bank on its sports betting show each March, and Lindh says Grambling championed the summit internally, clearing it across departments before the bank signed on. Grambling is one of 15 speakers added recently to the NEXTPredict summit New York lineup, bringing the confirmed roster to 91 speakers across five stages, with about 2,500 attendees expected on October 22 and 23.

Sports Still Dominate Prediction Market Turnover, But Valuations Bet on More

Roughly 90% of all liquidity and turnover in prediction markets currently comes from sports contracts, Lindh told Decrypt — a figure that reveals a lot about how the category is actually being used today, even as it’s pitched to Wall Street as something bigger. A large share of users, he said, simply treat these platforms as an alternative sportsbook.

That creates an obvious tension. “The story that the prediction market industry is telling investors now is that the future of the prediction market space is not what the prediction market space is today,” Lindh said. In other words, the valuations being assigned to these platforms only make sense if the category expands well beyond sports wagering.

Kalshi, Polymarket and DraftKings: Comparing the Numbers

The scale of that bet shows up clearly in the numbers. Kalshi has reportedly raised capital at a valuation near $40 billion, while Polymarket closed a round valuing it at around $20 billion. For context, DraftKings — the closest publicly listed comparison — carries a market valuation of roughly $13 billion. Those Kalshi market valuations sit well above those of an established, regulated gambling operator, underlining just how much of the current pricing already assumes a future that hasn’t fully arrived yet.

This is worth pausing on. When a private prediction market is valued at three times a listed sportsbook operator’s worth, investors are effectively pricing in growth well beyond sports contracts — into territory that doesn’t yet have a proven revenue model.

Why Wall Street Wants In — and What’s Holding It Back

For institutional investors, the appeal isn’t really about sports outcomes. It’s about pricing risks that no existing financial instrument can price well. Lindh pointed to a concrete example: a conference organizer in New York can execute flawlessly and still lose a quarter’s revenue to a hurricane, a risk that conventional hedging tools simply don’t cover. The bet among investors is that prediction markets evolve into “a more institutional tool,” letting banks and their clients hedge exposures they currently can’t hedge anywhere else. NEXT.io says it already runs internal markets among its own staff to forecast whether the company will hit its commercial targets — a small-scale test of the same logic banks are weighing at a much larger scale.

Not every bank wants the same thing out of this. Research desks are curious whether market odds offer a sharper read on real-world events than traditional polling. Others are focused on internal forecasting tools, or on whether clients might eventually use these contracts to hedge business risk directly.

Regulatory Uncertainty at the State Level Remains the Bottleneck

What’s actually slowing things down, according to Lindh, is regulatory clarity — or the lack of it. Large banks are largely waiting for state-level litigation to resolve before committing further resources to the space. This matters because it draws a line between banks that are willing to engage publicly, like Morgan Stanley through its NEXTPredict role, and the broader wave of institutional money that’s reportedly still sitting on the sidelines until the legal picture at the state level becomes less murky. Until that clears, expansion of institutional capital prediction markets activity is likely to stay incremental rather than sweeping.

Morgan Stanley’s Track Record With Kalshi

Morgan Stanley’s move at NEXTPredict doesn’t come out of nowhere. The bank took part in Kalshi’s $1 billion Series F funding round in May, which valued the exchange at $22 billion at the time — a figure that has since climbed toward the $40 billion mark now being reported. Its wealth management division had already examined the sector in an April report, arguing that the industry’s growth had outpaced the regulatory framework built to govern it.

There’s also empirical work backing the bank’s interest. In August, Counterpoint Global published a study on forecasting accuracy that drew on more than 72 million Kalshi trades. The findings showed that contract prices tracked real-world outcomes closely, though traders tended to slightly underrate favorites and overrate long shots. For an institution weighing whether prediction markets can function as genuine pricing tools rather than novelty betting products, that kind of accuracy data carries real weight.

Taken together, the funding round, the internal research, and now a public leadership role at NEXTPredict paint a picture of a bank building conviction in stages rather than making a single, splashy bet. Whether that conviction spreads to other major banks may depend less on the technology and more on how quickly state regulators settle the legal questions still hanging over the industry.