CNBC
25 May 2026, 11:30 UTC · 1w ago
When are prediction markets most helpful? Evercore ISI has a formula
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CNBC
25 May 2026, 11:30 UTC · 1w ago
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4 claims · impact-rated
Evercore ISI found that only about 8% of events on Kalshi and Polymarket clear $1 million in trading volume. — Low liquidity in the majority of contracts suggests prediction markets are currently too thin to serve as a reliable systemic hedge or pricing signal for most assets.
-0.30Prediction markets are most reliable when they feature high trading volume, short-term durations, and simple resolution rules. — Provides a framework for investors to identify which prediction market signals are actually actionable versus those that are noise.
+0.20Prediction markets can be distorted by traders acting on entertainment or political views rather than objective forecasting. — Highlights a 'contamination' risk where prices reflect sentiment or bias rather than true probability, potentially misleading risk managers.
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Institutional attention and the 2024 CFTC decision to approve election contracts have driven significant growth in platforms like Kalshi and Polymarket. — Indicates growing legitimacy and institutional adoption of prediction markets as a financial tool.
+0.10Ticker attribution
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The article reports on research and analysis conducted by Evercore ISI strategists without attributing positive or negative performance to the firm itself.
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