Jeremy Maletz: Prediction markets can hedge economic risks, market makers ensure trading stability, and Kalshi’s capital advantages support institutional trades | Odd Lots

Prediction markets could revolutionize institutional investing by offering new hedging tools and price discovery methods.

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Add us on Google by Editorial Team Jun. 6, 2026

Key Takeaways

• Prediction markets have potential utility in hedging economic risks, beyond just entertainment.
• Liquidity in sports betting markets is substantial, but prediction markets for other events face adoption challenges.
• Market makers are crucial for providing liquidity and stability in trading environments.
• Susquehanna focuses on options and uses Bayesian probabilities to explore new market opportunities.
• Market makers bridge the gap between buyers and sellers, facilitating trades across time and size.
• Kalshi’s capital advantages make it well-suited for institutional-sized trades and market bootstrapping.
• Prediction markets can offer valuable price discovery even with low trading volumes.
• Despite volume limitations, prediction markets can be viable hedging instruments for corporations.
• Institutional players are hesitant to enter new markets due to liquidity and compliance concerns.
• Intermediaries play an essential role in helping institutions navigate new trading environments.
• The integration of prediction markets into institutional investing is a key area of exploration.
• Understanding the specific economic risks that prediction markets can hedge against is crucial.
• Broader acceptance of prediction markets is needed to match the liquidity seen in sports betting.

Guest intro

Jeremy Maletz is Head of Macro Trading and Prediction Markets at Susquehanna International Group. He leads the firm’s market-making business with Kalshi and has discussed how prediction markets could be used by larger institutional investors, including hedge funds.

The role of prediction markets in economic risk management

• Prediction markets can be useful for hedging economic risks beyond entertainment events.

• In theory some of these contracts could be useful for hedging some sort of economic risk maybe not the taylor swift one or the half time for show ones but some of these other ones.

  — Jeremy Maletz

• Liquidity in sports betting is significant, but prediction markets for other events face adoption challenges.

• We know there’s like a ton of liquidity for like the sports betting etcetera like that’s not the problem that needs to be solved it’s these other things where in theory these might be useful instruments for hedging some sort of economic risk.

  — Jeremy Maletz

• Understanding the specific types of economic risks that prediction markets can hedge against would provide clarity.
• Prediction markets offer potential beyond entertainment, indicating their relevance in risk management.
• Broader acceptance of prediction markets is needed to match the liquidity seen in sports betting.
• The integration of prediction markets into institutional investing is a key area of exploration.

Importance of market makers in trading environments

• Market makers are essential for providing liquidity and stability in trading environments.

• Why does this market need market makers why can’t it be entirely peer to peer such that if all of us in the room just wanted to trade we make a price amongst each other on an exchange why do why is a market maker an important part of the infrastructure for this to work.

  — Jeremy Maletz

• Susquehanna is a market-making firm that focuses on options and explores new opportunities through Bayesian probabilities.

• We’re primarily a a market making firm and our bread and butter has always been options… we have a culture overall that’s very much looking for new opportunities and thinking about things in probabilities.

  — Jeremy Maletz

• Market makers bridge the gap between buyers and sellers, facilitating trades across time and size.

• What a market maker is really doing is it’s helping to bridge the gap between the different people who are trying to trade… we’re basically saying hey we’re gonna be there when you wanna trade and then we’re gonna wait and when tracy wants to trade we’ll take the other side of it…

  — Jeremy Maletz

• Understanding the role of market makers in financial markets and how they facilitate trading is crucial.
• Market makers ensure efficient trading, which is fundamental to the operation of financial markets.

Kalshi’s competitive advantage in market-making

• Kalshi is well-suited to bootstrap a market and handle institutional-sized trades due to its capital advantages.

• We can provide much much larger size on things… we’re well suited to bootstrap a a market and to do institutional type size because we’re not constrained by capital in that way.

  — Jeremy Maletz

• Knowledge of how capital constraints affect market operations and the significance of institutional trading is important.
• Kalshi’s competitive advantage in the market-making space is crucial for understanding its operational capabilities.
• The ability to handle larger trades positions Kalshi as a key player in the market-making industry.
• Capital advantages allow Kalshi to support institutional trading and market bootstrapping.
• Understanding the significance of institutional trading in the market-making industry is essential.
• Kalshi’s operational capabilities highlight its role in facilitating large-scale trades.

Prediction markets and price discovery

• Prediction markets can provide valuable price discovery even with low trading volumes.

• …what the prediction markets really provide is information it it’s a price discovery mechanism… it doesn’t take as much volume as you would think to get to a fair price…

  — Jeremy Maletz

• Understanding how prediction markets function and their role in price discovery is crucial.
• Prediction markets can still be effective despite low trading volumes, highlighting their value in risk management.
• Price discovery is a key function of prediction markets, offering insights into market dynamics.
• The ability to discover fair prices with low volumes emphasizes the efficiency of prediction markets.
• Understanding the role of prediction markets in price discovery is essential for risk management.
• Prediction markets’ efficiency in price discovery makes them valuable tools for economic actors.

Viability of prediction markets as hedging instruments

• Prediction markets can be viable hedging instruments for corporations despite current volume limitations.

• …we want to bootstrap institutional liquidity… we can do our own internal vetting… and now we’re comfortable going out there and saying we’re confident enough in this price…

  — Jeremy Maletz

• Knowledge of the current state of prediction markets and their potential for institutional use is important.
• The potential of prediction markets as hedging tools for large economic actors is significant.
• Increased institutional participation is needed to enhance the viability of prediction markets.
• Prediction markets offer hedging opportunities despite limitations in trading volumes.
• Understanding the potential of prediction markets for institutional use is crucial for market development.
• The viability of prediction markets as hedging instruments depends on increased liquidity and participation.

Challenges for institutional players in new markets

• Institutional players are hesitant to enter new markets due to concerns about liquidity and compliance.

• They look at the markets and they might say well i don’t see how we could actually hedge some of these things because there’s not enough volume and liquidity… the other question is okay well we sort of need our compliance to get to get comfortable with this this stuff is so new.

  — Jeremy Maletz

• Understanding the challenges institutions face in adopting new trading markets is crucial.
• Liquidity and compliance concerns are significant barriers for institutional investors.
• The hesitance of institutional players highlights the need for improved market conditions.
• Overcoming liquidity and compliance challenges is essential for institutional market participation.
• The adoption of new trading markets by institutions depends on addressing these challenges.
• Understanding the specific barriers institutions encounter is vital for market development.

Role of intermediaries in institutional trading

• The role of intermediaries is essential for institutions to navigate new trading environments effectively.

• We want to work with a lot of those other intermediaries that could be a broker it could be a bank it could be an insurance company… they could have a very important role in.

  — Jeremy Maletz

• Knowledge of how institutional trading involves various intermediaries is important.
• Intermediaries facilitate transactions and compliance, aiding institutions in trading effectively.
• The importance of intermediaries in the trading process is vital for institutional participation.
• Institutions rely on intermediaries to navigate complex trading environments.
• Understanding the role of intermediaries is crucial for institutions looking to hedge and trade.
• Intermediaries play a key role in helping institutions overcome market challenges.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.