{
  "id": 9159814,
  "title": "Demystifying the Role of Market Makers in Prediction Markets",
  "url": "https://urgent.news/2026/09/22/demystifying-the-role-of-market-makers-in-prediction-markets",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-22T16:22:23.000Z",
  "source": {
    "name": "Front Office Sports",
    "slug": "front-office-sports",
    "url": "https://frontofficesports.com/article/demystifying-the-role-of-market-makers-in-prediction-markets/"
  },
  "original_language": "en",
  "account": "Prediction markets function similarly to sports betting, but the mechanics of trades differ. Market makers, such as Susquehanna, aim to maintain liquidity by offering pricing, rather than a single platform determining the price. Susquehanna, Jump Trading, Kalshi, Polymarket, DraftKings, and FanDuel's market-making divisions provide liquidity by posting buy and sell prices for contracts, facilitating trades even when no other trader is ready to take the opposite position. Platforms create these markets, such as \"NBA Rookie of the Year,\" and traders and market makers submit prices. This differs from traditional sportsbooks, which act as the \"house\" by establishing the price, serving as the counterparty, and determining the price if the customer wishes to exit a wager prematurely. From a customer's viewpoint, sportsbook betting and prediction market trading resemble each other; however, beneath the surface, the mechanisms are distinct. Ric Best, Susquehanna's head of prediction markets, explained that their role is to help connect demand over time and space. When two traders, say one wanting to purchase a contract on the Chicago Bears and another wanting to sell it, are not transacting simultaneously, market makers step in at different times to enable the market to continue functioning. This is a key distinction from traditional sportsbooks. For example, if a customer places a futures bet on the Houston Texans to win the Super Bowl on DraftKings' traditional sportsbook, the company establishes the price and accepts the opposite side of the wager. If the customer later wishes to exit the position, they may only have the option to receive a cash-out offer from DraftKings. In a prediction market, the customer trades into a live market, allowing them to sell the contract at the best available bid from market makers and other traders if they wish to exit their position. Market makers are crucial to the market, acting as the \"framework, the scaffolding\" that guarantees there is always a price available for transactions, according to Best. Critics argue that market makers are merely a \"house\" version of prediction markets. However, JB Mackenzie, VP and GM of futures and prediction markets at Robinhood, believes that market making is often misunderstood. He emphasizes that a diverse market is critical, involving participation from all market makers, retail traders, and institutional participants. A singular, one-stop shop with one market maker taking the opposite side on all trades is prohibited in the United States, as it would be considered a contract for difference, or CFD. Jacob Fortinsky, Novig's founder and CEO, perceives substantial potential for increased institutional involvement in prediction markets. He stated, \"the number of market-making firms, prop-trading firms, and other institutional investors that are still sitting on the sidelines is massive—two orders of magnitude more than the current market participants.\" Therefore, he anticipates a rise in institutionalization, making the market resemble traditional financial markets more closely. Best is in favor of boosted competition, as it benefits both the industry and consumers. He told FOS, \"Competition is great for the industry, it's great for consumers. This industry will never succeed if it's not a great experience, the best experience possible, for customers. Market maker competition is integral to that.\"",
  "summary": "“Essentially, our role is to help bridge demand across time and space.”",
  "key_points": [
    "Market makers maintain liquidity by offering pricing, not a single platform.",
    "Susquehanna, Jump Trading, and others provide liquidity in prediction markets.",
    "Market makers enable trades even when no other trader is ready to take the opposite position."
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}