Galaxy Digital is discussing becoming a liquidity provider for prediction market platforms Polymarket and Kalshi. Regulatory approvals make it easier for institutional trading desks to offer liquidity. Galaxy Digital CEO Mike Novogratz mentioned experimenting with market-making on prediction markets. Large market makers could lower costs and introduce arbitrage opportunities in the prediction market space.

In the prediction market sector, price divergence is significant due to a lack of arbitrageurs. Galaxy Digital could provide much-needed liquidity to platforms like Polymarket and Kalshi. Previously, specialized crypto market makers like Jump Trading and Susquehanna International paved the way for institutional market makers in prediction markets. Regulatory approvals have been key for platforms like Kalshi to onboard institutional market makers and facilitate their comeback in the U.S.

Legal challenges based on gambling laws continue to be a concern for prediction market platforms and market makers like Galaxy. Lawsuits from the New Jersey Division of Gaming Enforcement and a native American tribe have posed threats. However, favorable verdicts could set precedents curbing further litigation and encouraging more institutional participation in prediction markets.

Read more at Yahoo Finance: Galaxy in Talks to Provide Liquidity for Polymarket and Kalshi as Trading Firms Jump Into Prediction Markets