Galaxy Digital in Talks to Provide Liquidity for Polymarket and Kalshi

TLDR

• Galaxy Digital is in talks with Polymarket and Kalshi to become a liquidity provider for their prediction market platforms
• CEO Mike Novogratz said Galaxy is doing small-scale experiments with market-making and plans to provide broader liquidity
• Polymarket and Kalshi have generated around $42.4 billion in combined trading volume
• Other major trading firms like Jump Trading and Susquehanna International Group are also entering the prediction market space
• Kalshi recently raised $1 billion at an $11 billion valuation while Polymarket is preparing a funding round that could value it at $12-15 billion

Galaxy Digital is exploring a new business opportunity in prediction markets. The crypto investment firm led by Mike Novogratz is in discussions with Polymarket and Kalshi about providing liquidity on their platforms.

Novogratz told Bloomberg that Galaxy Digital is currently conducting small-scale experiments with market-making on prediction markets. The firm plans to expand and provide broader liquidity services on these platforms in the future.

Prediction markets allow users to trade yes or no contracts on future events. The price of each contract reflects what the market believes is the probability of that outcome happening. Users can trade on politics, sports, economic data and cultural events.

Polymarket and Kalshi are the two largest prediction market platforms. Together they have processed approximately $42.4 billion in total trading volume. The two platforms now account for roughly 97% of global prediction market volume.

Galaxy Digital would join other major trading firms entering this space. Jump Trading recently started making markets on Kalshi. Susquehanna International Group has publicly confirmed activity on Kalshi as well.

AQR’s Cliff Asness said his firm is reviewing a possible expansion into sports betting. Kalshi also runs its own internal market-making desk to handle order flow during busy periods.

Financial Backing and Regulatory Progress

Kalshi recently closed a $1 billion funding round at an $11 billion valuation. Sequoia and CapitalG led the investment round. The company is using the funds to expand its product listings and move into consumer markets including sports.

Polymarket is preparing for a new fundraising round. The company could be valued between $12 billion and $15 billion. This follows an earlier valuation of $9 billion supported by a $2 billion strategic investment from ICE, the parent company of the New York Stock Exchange.

Both platforms have made regulatory progress this year. Polymarket purchased QCEX, a CFTC-licensed entity, for $112 million. This acquisition reopened access for U.S. users and resolved a Department of Justice inquiry.

Kalshi is already a CFTC-designated contract market. The platform won court approvals for election-based contracts. The company now plans to expand into event categories that could compete with parts of traditional finance.

Platform Growth and Mainstream Recognition

The prediction market sector saw record activity during the 2024 U.S. election cycle. Polymarket processed more than $3.5 billion in trading volume during this period. This figure exceeded the volume seen at major sportsbooks.

Google announced on November 7 that it will display real-time odds from Polymarket and Kalshi in Google Search and Google Finance. This integration brings prediction market data to millions of mainstream users. The move represents a step toward wider adoption of these platforms.

Prediction markets rely on liquidity providers to maintain tight spreads. When a user buys a yes contract, someone else must take the no side. Major trading firms provide the capital needed to ensure smooth trading on both sides of each market.

Galaxy Digital’s discussions with Polymarket and Kalshi show that institutional firms are taking prediction markets seriously. The talks indicate these platforms are entering a phase where top-tier market makers may help scale liquidity across different event types.

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