Million-Dollar Salaries Lure Talent, Is Wall Street Taking Over the Pricing Power of Prediction Markets?

Original Author: Niusike, Deep Tide TechFlow

It has finally arrived. The prediction markets, once built by political supporters, speculative retail investors, and airdrop hunters, are now welcoming a group of silent yet formidable new players.

According to a report by the Financial Times on Thursday, several well-known trading firms, including DRW, Susquehanna, and Tyr Capital, are establishing dedicated prediction market trading teams.

DRW posted a job advertisement last week, offering a base salary of up to $200,000 for traders capable of "monitoring and trading active markets in real-time" on platforms like Polymarket and Kalshi.

Options trading giant Susquehanna is hiring prediction market traders who can "detect incorrect fair value," identify "anomalous behavior" and "inefficiencies" in prediction markets, while also building a dedicated sports trading team.

Crypto hedge fund Tyr Capital is continuously recruiting prediction market traders who are "already running complex strategies."

Data supports this expansion ambition.

Monthly trading volume surged from less than $100 million at the beginning of 2024 to over $8 billion by December 2025, with a record single-day volume of $701.7 million on January 12th.

When the pool of capital becomes deep enough to accommodate the scale of giants, Wall Street's entry becomes an inevitability.

Arbitrage First

In prediction markets, institutions and retail investors are not playing the same game at all.

Retail investors often rely on fragmented information to predict single events, which is essentially gambling, while institutional players focus on cross-platform arbitrage and structural market opportunities.

In October 2025, Boaz Weinstein, founder of hedge fund Saba Capital Management, stated at a closed-door meeting that prediction markets allow portfolio managers to hedge investments with greater precision, especially regarding the probability of specific events occurring.

Standing next to Polymarket CEO Shayne Coplan at the time, he said, "A few months ago, Polymarket showed a 50% probability of a recession, while the credit market indicated a risk of about 2%. You can think of countless paired trades that were previously impossible."

According to Weinstein's view, a hedge fund manager could buy the "no recession" contract on Polymarket. Because the market priced the recession probability at 50%, this contract was relatively cheap.

Simultaneously, one could short some bonds or credit products in the credit market that would plummet during a recession. Since the credit market only assigned a 2% probability to a recession, these products were still priced high.

If a recession actually occurred, you would lose a small amount on Polymarket but could make a significant profit in the credit market as those overvalued bonds would crash.

If there was no recession, you would profit on Polymarket and might incur a small loss in the credit market, but overall, you would still be profitable.

The emergence of prediction markets has provided traditional financial markets with a brand new "price discovery tool."

The Arrival of the Privileged Class

What tilts the scale even further is the privilege at the rule level.

Susquehanna is the first market maker for Kalshi and has reached an event contract agreement with Robinhood.

Kalshi offers numerous benefits to market makers: lower fees, special trading limits, and more convenient trading channels, with specific terms not publicly disclosed.

The entry of market makers will quickly change this market.

Previously, prediction markets often suffered from liquidity shortages, especially for niche events. When you wanted to buy or sell a large volume of contracts, you might face wide bid-ask spreads or simply couldn't find a counterparty.

Professional institutions will swiftly eliminate obvious pricing errors. For example, price discrepancies for the same event across different platforms, or clearly unreasonable probability pricing, will be quickly arbitraged away.

This is not good news for retail investors. Previously, you might have found that "Trump wins the election" was priced at a 60% probability on Polymarket and 55% on Kalshi, allowing for simple arbitrage. Such opportunities will largely cease to exist in the future.

With Wall Street's PhDs commanding six-figure salaries, prediction contracts may also enter an era of specialization and diversification, moving beyond simple event prediction. For example:

1. Multi-event combination contracts, similar to parlays in sports betting.

2. Time-series contracts, predicting the probability of an event occurring within a specific timeframe.

3. Conditional probability products, e.g., if A occurs, what is the probability of B occurring?

...

Looking back at financial history, from forex to futures, and then to cryptocurrency, the development of every emerging market follows a similar trajectory: ignited by the sparks of retail investors, eventually taken over by institutions that command the entire forest.

Prediction markets are repeating this process. Technological advantages, capital scale, and privileged access will ultimately determine who remains in this game of probability.

For retail investors, while there might still be a glimmer of hope in long-cycle predictions or niche areas, they must face reality. When Wall Street's precision machinery starts operating at full speed, the狂欢期 of easily profiting from information asymmetry may be gone for good.