Major quant firms target Polymarket and Kalshi as serious asset class
Major quantitative trading firms including DRW, Wintermute, and IMC are building dedicated prediction market trading desks to exploit pricing inefficiencies across platforms, treating political and sports outcome markets as a serious asset class alongside traditional derivatives.
DRW, the Chicago-based quantitative trading firm founded in 1992, recently posted job listings requiring candidates to monitor prices across Polymarket and Kalshi simultaneously and identify cross-platform mispricings. The positions specify strategies including microstructure arbitrage, cross-platform arbitrage, and news-driven momentum trading at sub-second speeds. Wintermute, which processes billions in daily crypto volume, and IMC, a proprietary trading firm, have similarly signaled institutional entry into prediction markets.
The infrastructure push reflects genuine scale. Polymarket processed between $22 billion and $40 billion in volume across political, economic, and sports markets in 2025. Sports betting alone shows concentration: the UEFA Champions League Winner market generated $256 million in volume as of last week, the 2026 NBA Champion market $399 million, and the 2026 NHL Stanley Cup market $79 million, for a combined $730 million across three sports markets.
Pricing inefficiencies between platforms create arbitrage opportunities. On May 14, 2026, odds on Andy Burnham’s chances in Polymarket’s “Next UK Prime Minister” market surged from 24 cents to 43 cents, illustrating the kind of short-term volatility quant desks target. Settlement complexity between traditional betting exchanges like Betfair, which settles in sterling and processes over a billion pounds annually, and decentralized platforms like Polymarket, which settles in crypto, creates information lag and pricing windows that algorithmic traders can exploit.
Yet Harry Crane, a statistics professor at Rutgers University, questions whether institutional capital will drive market accuracy in sports outcomes. “I don’t expect the institutional capital is contributing meaningfully to the accuracy of these markets, especially in the case of sports,” Crane said. “The accuracy of the markets is driven by specialized sports betting groups, which are much sharper at pricing sports outcomes.”
Crane argues that institutional firms, despite larger balance sheets, are likely applying “techniques on short-term market dynamics and other technical aspects of trading that capitalize on short-term market fluctuations without insight into the event outcome.” Veteran sports bettors, he noted, remain the sharpest players. “It incorporates all known pre-game information, such as injuries and lineup changes, and the sharpest players tend to wait until closer to game time to place bets because that is when the limits tend to be highest.”
Liquidity fragmentation across Polymarket, Kalshi, and traditional sportsbooks means no single venue reflects full market consensus. HyperLiquid, an onchain perpetuals exchange, processed over $10 billion in daily volume at its peak and is preparing to launch prediction markets ahead of the 2026 World Cup, which will feature 64 games. Traditional crypto exchanges OKX and Crypto.com have also posted prediction market job listings, signaling broader institutional interest beyond pure quant shops.
The shift reflects prediction markets’ transition from niche betting venues to platforms where institutional trading strategies can operate at scale, even if the most accurate pricing still originates from veteran sports betting groups rather than algorithmic capital.
