Prediction markets have scaled volume rapidly, yet institutional adoption remains elusive — that was the core tension at the Security Traders Association's annual market structure conference on Thursday.

The panel, titled "Regulating the Future: Prediction Markets in a Modern Market Structure," featured speakers from Robinhood, DraftKings and Kalshi. Its placement on the agenda marks prediction markets as a newcomer among perennials such as options, retail flow and buy-side issues. Panelists' framing suggested the category will become a perennial topic.

What was actually said, and what was asserted?

The measured fact: volume on prediction market platforms has grown quickly, and operators continue to roll out new products. The asserted part: platforms claim institutional interest is broad, but desks are waiting for peers to move first.

The panel set a conceptual backdrop. Prediction markets sit at the intersection of finance, technology and how people process information. The premise is simple: everyone holds a prediction, and a market assigns a price to that prediction.

Is this just sports betting?

Panelists from the platforms rejected the comparison. Some prediction market products are based on sports outcomes, they conceded, but beyond that shared subject matter there is no direct intersection with sports betting. Sports betting operates on a single-dealer market structure, entirely different from the exchange-style structure of prediction markets.

The likeness, panelists argued, comes from the speculative element. Speculation is considered healthy and necessary in financial markets, they noted, and established products — insurance, credit default swaps and some options contracts — also carry binary payouts.

What does this change for institutional desks?

For now, very little in execution workflow. The panel stated plainly why institutions have stayed away: prediction markets' liquidity, product standardization and margin capacity are not yet up to institutional standards. Institutions already hedge and speculate in bespoke ways through their sell-side banks, so the platforms currently offer no execution-cost or risk advantage a desk cannot replicate.

Retail demand has driven growth so far. The nascent markets meet demand for always-on trading across a wide variety of categories — a capability traditional venues do not offer.

On sequencing, panelists said many institutions are interested but are waiting for others to get involved first. Once participation begins and more safeguards and education are in place, market operators say liquidity will beget liquidity and growth will accelerate. That is an assertion, not a measured outcome — no participation figures were cited.

The one-to-three-year outlook

Asked what the next one to three years hold, panelists offered four projections:

• Sports volumes will grow in absolute terms but decline as a percentage of overall prediction markets volume.
• Product development will continue.
• Legal durability will improve.
• International expansion will proceed, alongside progress toward institutional participation.

Each item is a forecast from operators with a direct commercial stake in the outcome. None carried volume figures, timelines or jurisdictional specifics from the panel record.

The gap to watch

The open question for buy-side and sell-side desks is operational, not conceptual: whether platforms can build the liquidity depth, standardized contracts and margin infrastructure that institutional risk and compliance frameworks require. Until those components meet institutional standards, prediction markets remain a retail venue with an institutional waiting list — one that operators expect will shorten as legal durability and international reach improve over the next three years.