Morgan Stanley has taken a formal public role in prediction markets by joining the NEXTPredict summit in New York as a strategic partner. The two-day event, scheduled for October 22 and 23 at Hudson Yards, is expected to draw about 2,500 attendees and features 91 confirmed speakers across five stages.

The bank will lead a day-two panel focused on institutional capital. Stephen Grambling, Morgan Stanley’s head of U.S. gaming, lodging and leisure research, will moderate the discussion on what is required for large financial institutions to deploy capital into the space, along with remaining market structure, risk and participation issues.

Pierre Lindh, co-founder and managing director of NEXT.io, the organizer of the summit, described Morgan Stanley as the first bank to attach its name publicly to a prediction markets initiative of this kind. Lindh noted that NEXT.io has worked with the bank for five years and partners with it on an annual sports betting event. Grambling championed the summit internally and secured clearances across departments before the firm signed on.

Sports Contracts Still Dominate Activity

Despite rising institutional interest, sports contracts continue to account for roughly 90 percent of liquidity and turnover in prediction markets. Many users treat the platforms as alternatives to traditional sportsbooks, according to Lindh.

This concentration creates a gap between current usage and the valuations assigned to leading platforms. Kalshi has been reported at a valuation near $40 billion, while Polymarket closed a funding round at about $20 billion. By comparison, publicly listed sportsbook operator DraftKings carries a market value of approximately $13 billion.

Lindh said those valuations only hold if the category expands well beyond sports into areas such as trading, forecasting and risk management. Institutional investors see potential in using event contracts to price risks that conventional instruments do not cover effectively. One example cited is a conference organizer that can execute its plans perfectly yet still lose a quarter’s revenue to a hurricane—an exposure that standard hedges do not address well.

Different banks are exploring distinct applications. Research desks are testing whether market odds provide sharper signals on real-world events than traditional polling. Others are examining internal forecasting tools or the possibility that clients could use contracts to hedge business risks directly. NEXT.io itself runs internal staff markets to forecast whether the company will meet commercial targets.

Prior Involvement and Regulatory Hurdles

Morgan Stanley’s participation at NEXTPredict builds on earlier steps. The bank took part in Kalshi’s $1 billion Series F financing announced in May, which valued the exchange at $22 billion at the time. Institutional trading volume on Kalshi had risen 800 percent over the prior six months as of that announcement.

In April, Morgan Stanley’s wealth management division issued a report arguing that the industry’s growth had outpaced the regulatory framework governing it. In August, Counterpoint Global published a study based on more than 72 million Kalshi trades. The analysis found that contract prices tracked real-world outcomes closely, though traders tended to slightly underrate favorites and overrate long shots.

An earlier Morgan Stanley report, “The Wisdom of Crowds in Markets,” examined prediction markets alongside sports betting, parimutuel betting and equities. It described prediction markets as information-aggregation systems whose accuracy depends on diverse views, effective aggregation and incentives for correct forecasts. The report also distinguished betting markets, which are zero-sum before costs, from stocks, which have positive expected returns over time.

Regulatory uncertainty remains the primary constraint on broader institutional activity. Large banks are largely waiting for state-level litigation to resolve before committing additional resources. Until greater clarity emerges, expansion of institutional participation is expected to remain gradual.

The strategic partnership does not indicate that Morgan Stanley is launching a prediction-market trading product, brokering event contracts or committing capital beyond its existing involvement with Kalshi. Lindh stated that the next phase of the sector will be shaped by how the largest financial institutions choose to engage with the category.