Citadel Securities is actively exploring a move into prediction markets focused on geopolitical and macroeconomic events, a shift that could add significant liquidity to a fast‑growing but still thinly traded sector.
President Jim Esposito, speaking at an economic forum in Washington, D.C., said the firm is examining how event‑based contracts could be used by clients to manage exposure to political and global risk, rather than for sports‑related wagers, which he stressed are not an area of interest.
Focus on political and macro risk, not sports
Esposito said Citadel Securities is open to supporting liquidity in event contracts linked to outcomes such as elections and macroeconomic developments, citing the upcoming U.S. midterm elections as one potential use case.
Sports‑based trades currently account for about 62% of prediction market volume, according to Bernstein research, helped by fragmented state‑level rules and limits on traditional betting platforms. Esposito indicated Citadel’s potential participation would be aimed at markets tied to politics and global risk scenarios, where demand for hedging tools is growing.
Rapid growth in prediction market volumes
Prediction markets, which allow users to trade contracts on real‑world outcomes, have expanded quickly.
- Total prediction market volume reached roughly $51 billion in 2025, tripling from the prior year, Bernstein data shows.
- Polymarket and Kalshi alone have already facilitated around $60 billion in trades this year.
- Bernstein forecasts approximately $240 billion in total volume in 2026 and projects an 80% compound annual growth rate through 2030.
- By 2030, annual volumes could approach $1 trillion, supported by regulatory developments and broader distribution partnerships.
Analysts attribute part of this growth to more consistent liquidity in event‑based platforms compared with traditional wagering markets.
Citadel’s potential impact on market structure
Citadel Securities, a major Chicago‑based market maker in equities and options, is already handling order flows from retail brokerages that have begun integrating event‑based products.
Esposito said the rising traction of prediction markets could pull the firm more directly into the ecosystem, suggesting that Citadel’s participation could ease complaints about shallow order books and limited capacity for larger trades.
He added that he follows platforms such as Kalshi closely and that the firm is evaluating whether and how to provide liquidity in these contracts as the market evolves.
Regulatory framework taking shape
The Commodity Futures Trading Commission (CFTC) maintains regulatory authority over event contracts and is in the process of refining its oversight.
- The agency has said it plans to issue guidelines for prediction platforms as participation rises.
- At a recent House Agriculture Committee hearing, Chairman Michael Selig faced questions about the CFTC’s enforcement capacity and staffing as supervision of these markets expands.
- The CFTC has also issued an advance notice of proposed rulemaking and is accepting public comment on how to structure rules for event‑based platforms.
This federal push is unfolding alongside state‑level disputes, where some authorities are challenging the CFTC’s jurisdiction, particularly over sports‑related contracts. Despite the tension, the agency has signaled support for innovation in event‑based derivatives within its existing legal framework.
Strategic ties and data value
Citadel Securities’ chief executive, Peng Zhao, was among the participants in a $185 million financing round for Kalshi last year, underscoring the firm’s interest in the sector’s infrastructure and technology.
Although capital‑intensive collateral requirements still limit broad institutional usage, large financial firms increasingly view prediction markets as a source of real‑time data on probabilities for political and economic outcomes, similar to other market‑based sentiment indicators.
Esposito’s comments suggest Citadel Securities sees these platforms both as a potential liquidity venue and as a tool for clients seeking to hedge event risk, rather than as an extension of the sports betting industry.
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