From Yahoo Finance: 2025-05-23 14:07:00

Traders on prediction markets like Kalshi bet over $10 million on the next pope, despite Catholicism’s stance on gambling. These platforms allow betting on a wide range of events, from egg prices to the U.S. presidential election. Traders, like 21-year-old Coby Shpilberg, use data analytics to trade on Kalshi, employing market-making strategies to profit.

Shpilberg initially struggled with trading on Kalshi but found success with market-making during the election. Market makers like Citadel Securities and Virtu handle massive trading volumes, earning significant profits. Kalshi’s papal-election market alone saw over $10 million in volume, showcasing the popularity of prediction markets and trading strategies.

Kalshi’s contracts are binary, offering payouts based on outcomes. Market makers set buy and sell prices to collect a profitable spread. Shpilberg’s market-making strategy involves resting orders on both sides of the book, providing liquidity and collecting small spreads on a large volume of orders to turn a profit. This approach has proven successful for him.

While Shpilberg’s market-making strategy differs slightly from institutional practices, the goal remains the same – provide liquidity, collect spreads, and remain position-neutral. Kalshi offers an official market-making program for institutions like Susquehanna International Group, ensuring market smoothness and integrity. Shpilberg’s success demonstrates the potential of market-making in prediction markets. Individual traders are using algorithms to profit from prediction markets like Kalshi, making over $165,000 in just months. Market-making is a popular strategy, but it comes with risks. Undergrads and students are also creating algorithms to profit from these markets, with one student achieving a $6.80 profit on a $33.40 investment. Traders use various strategies, including arbitrage and deep research, to gain an edge and make a living in prediction markets. As more money flows into these markets, they may become more efficient, reducing opportunities for arbitrage but opening up new possibilities for traders to explore. People are placing bets on events like the selection of a new pope in prediction markets. – MarketWatch

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Read more at Yahoo Finance: How young traders are getting rich betting on things like Rotten Tomatoes scores and the pope