Charles Schwab is thinking about stepping into prediction markets, but in a very careful way.
CEO Rick Wurster told investors the company is reviewing whether to offer these products. He made it clear this isn’t a done deal yet, but the idea is on the table. According to him, setting it up wouldn’t be difficult if they decide to move forward.
Still, there’s a clear line Schwab doesn’t want to cross.
The company is not interested in prediction markets tied to sports, politics, or entertainment. Wurster basically sees those as too close to gambling and said people usually lose money in those types of markets. Schwab wants to stay focused on tools that fit long-term investing, not speculation.
Interestingly, he also admitted that when they discussed prediction markets with clients, there wasn’t huge demand. So while the idea is being explored, it’s not something customers are strongly asking for right now.
At the same time, Citadel Securities is also watching this space.
President Jim Esposito said they are keeping an eye on how prediction markets develop. But he pointed out a key issue — low liquidity. In simple terms, there isn’t enough activity yet for big firms to jump in confidently.
That said, Citadel does see potential in a specific area: event-based contracts tied to financial risks.
Instead of betting on things like sports or entertainment, these contracts could help investors hedge real-world risks. For example, events that might affect markets or portfolios could be turned into tradable contracts. Esposito described this as a cleaner and more practical use of prediction markets.
So the direction is becoming clearer.
Big firms aren’t interested in turning investing platforms into betting apps. But they are curious about using prediction-style tools to manage risk in a smarter way.
Right now, the space is still early. Low liquidity and limited demand are holding things back. But if those improve, companies like Schwab and Citadel could step in — not to gamble, but to build more structured, finance-focused products.
