NEXTPredict brings exchanges, firms, policymakers together, discusses markets beyond elections

Discussions at NEXTPredict highlighted the evolution of prediction markets beyond electoral outcomes, with firms like Kalshi, Polymarket, and Robinhood presenting contracts covering areas such as finance and hedging.

The industry's major exchanges, trading firms, and policymakers convened in New York at Convene Hudson Yards on October 22 and 23, marking the event. With the U.S. midterm elections less than two weeks away, electoral matters dominated the discourse, yet executives were equally focused on future trajectories.

An initial trade at the conference did not result in a payout; NEXTPredict had placed a $12,000 premium on Kalshi for contracts that were set to yield approximately $3 million should more than half of scheduled arrivals at JFK airport in New York have been cancelled the day prior to the event. Pierre Lindh, co-founder of NEXTPredict, stated during the "Hedging the Unhedgeable" panel on Thursday that, "We ended up losing that trade yesterday, right?" He added, "And I can only say I'm very happy that we lost that trade, because that means we're all here today." Lindh elaborated that while conventional event insurance addresses cancellations, "most of these type of force majeure situations won't cancel the event. It will severely damage the event." Joe Grubb, head of business development at Susquehanna, which held the opposing side of that trade, mentioned that his firm models such risks internally within a span of one or two days, remarking, "It's sort of in our DNA at Susquehanna to price strange things." Nicolas Hull, director of business development at Kalshi, noted that small enterprises are now utilizing the exchange for hedging, citing a New York bar that entered into a contract related to a Knicks playoff promotion. He asserted that "we can list almost anything on our exchange," provided a contract is certified by the CFTC and possesses a verifiable data source.

Chuck Todd, who moderated a panel comparing polls against markets, characterized markets as a "fact checker" for journalism. Todd expressed that he was "bullish on prediction markets for the future of journalism," arguing that the involvement of capital creates a greater impetus for accuracy. He contended that prediction markets have effectively supplanted exit polls on election evenings, while simultaneously cautioning against the notion that polling itself is fundamentally flawed, stating, "You can still do a good poll. It just costs a lot."

However, other participants maintained a more reserved stance; Columbia University professor Rajiv Sethi commented that "Speed is not necessarily the same as accuracy," and John Phillips, CEO of PredictIt, reminded attendees that the mechanism relies on "it's called wisdom of crowds, not wisdom of whales." This measured skepticism proved prescient days later when Polymarket assigned Luiz Inácio Lula da Silva only a 20% probability of defeating Flávio Bolsonaro before Brazil's presidential runoff on Sunday, yet Lula ultimately secured a fourth term, according to Decrypt. Experts attributed this outcome to Brazil's restrictions on prediction markets, which relegated the odds-setting largely to international traders.

For the brokerage firm Robinhood, elections represented merely the initial phase of development. JB Mackenzie, vice president and general manager for futures and prediction markets at the brokerage, informed CNBC's Contessa Brewer, one of the journalists engaged by the organizers, that, "When I started doing this two years ago, it was about elections." He further explained that the scope has expanded, transforming into politics and sports, and now it is advancing into realms of economics and finance. Mackenzie noted that sports continue to be the largest sector, but contracts involving commodities such as gold, crude oil, and Bitcoin are exhibiting the quickest rate of growth, adding that "The simplicity of a probability is much more consumable for customers."

Bailey Springer of Polymarket, who manages regulatory strategy outside the United States, observed that regulatory bodies in major global financial centers are increasingly acknowledging that "prediction markets aren't going away" and possess genuine utility for both investment and risk mitigation. Springer stated, "At Polymarket, our position is that these are derivatives and should be regulated as such."

Latency presented another significant discussion point. During the "Race to Zero Latency" panel on Thursday, Farokh Sarmad, president and co-founder of Decrypt Media, pointed out that typical traders are often lagging behind professional entities when news breaks. He observed that "By the time you open Polymarket or Kalshi or Myriad or all the other prediction markets, you're usually a little too late." Sarmad proposed closing this temporal gap between information consumption and trading, a goal Decrypt is pursuing via its Solana-based Information Exchange, asserting that "The best way to reduce that latency is to be able to consume it and trade it directly on the same platform," and further emphasizing that "everything has to move on chain" for this to function.

Institutional capital was a major feature, with Morgan Stanley leading sessions on the second day. Lindh perceives the industry's subsequent debate taking shape, suggesting, "I think the next step will be the comparison between prediction markets and insurance."

The progression of these markets suggests a maturation from speculative, event-based betting to recognized financial instruments capable of addressing complex risk management needs across diverse economic sectors.

Why it matters

The industry's focus on hedging and complex financial contracts signals a maturation of prediction markets beyond simple political forecasting. Regulators and exchanges are increasingly recognizing these markets' utility for investment, which will shape future oversight. Readers should watch how these platforms integrate into traditional financial structures.