Traditional finance firms Charles Schwab and Citadel Securities are separately weighing entry into prediction markets, a fast-growing segment of trading.
Rick Wurster, CEO of Charles Schwab, told investors that Schwab will “likely” offer prediction markets at some point. He said client interest appears limited now, but the firm would “take a hard look at” the space and believes it would be straightforward to provide. Wurster added Schwab would avoid prediction markets tied to sports, politics or pop culture, positioning any offering toward tools that support long-term wealth building. “Prediction markets that are not aligned to that are not something that we want to pursue,” he said, noting gamblers generally lose money.
Platforms such as Kalshi and Polymarket have surged in use recently, with a combined record monthly trading volume of $23.6 billion in March, according to Token Terminal. That growth has drawn regulatory scrutiny: some U.S. state regulators have sued prediction platforms, alleging unlicensed sports betting, and federal officials and lawmakers have raised concerns about insider trading risks.
Citadel Securities president Jim Esposito said the firm is “absolutely keeping an eye on developments” in prediction markets. Speaking at a conference in Washington, D.C., he observed liquidity is currently limited but expects the market to “ramp and scale,” leaving open the possibility Citadel could get involved. Esposito said Citadel is not looking at sports markets “at the moment at all,” but sees potential in event contracts—such as election-related contracts—that institutional and retail clients might use to hedge portfolio risks. “Having a clean and distinct way to hedge certain risks, I think there’s a good use case and industrial logic to it,” he said.
The debate over prediction markets continues as firms weigh demand, regulatory risk and potential use cases for hedging versus concerns about gambling-like behavior and market integrity.
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