Cboe Makes Prediction Market Move, Leaves Sports Out for Now

• Exchange operator is the latest to enter prediction markets arena.
• Sports event contracts aren’t in the cards.
• Cboe prediction platform expected to launch in the coming months.

Cboe Global Markets (BATS: CBOE) is planning to roll out its own prediction markets platform, becoming the latest exchange operator to enter the fast-growing event contracts space.

In an interview with Bloomberg, CEO Craig Donohue said Cboe wants to offer yes/no event contracts based on economic data and financial markets to its clients in the coming months. That’s a potentially natural progression for a company that’s already one of the leaders in the derivatives trading industry.

Cboe provides trading solutions and products in multiple asset classes, including equities, derivatives, and foreign currency across North America, Europe, and Asia Pacific,” according to a press release.

In October, volume across Chicago-based Cboe’s four options exchanges set a monthly record, rising to 21.4 million on an average daily basis. The company said multi-list options and index options drove the increased turnover as average daily volume (ADV) in S&P 500 Index (SPX) derivatives, including zero-days-to-expiry (0DTE) options, surged.

Cboe Joining Rivals in Prediction Markets Game

Cboe is the latest major US exchange operator to enter the prediction markets industry. That ball got rolling in August when CME Group (NASDAQ: CME) announced a partnership with Flutter Entertainment’s (NYSE: FLUT) FanDuel. Yesterday, more details on that collaboration emerged, indicating FanDuel will offer sports event contracts in states where sports betting isn’t permitted.

On Cboe’s third-quarter earnings conference call two weeks ago, Donohue mentioned the company’s interest in prediction markets and how its competencies translate to the space.

“I want to make sure that we’re focused on event and prediction markets, digital and crypto markets, there’s extraordinary growth there,” he said. “I think they align well with our core capabilities in terms of what we’ve been able to achieve with the retail segment. Those are largely at this point, retail-oriented product opportunities. I’d like to think that we’ve been an innovator in shorter-dated contracts through 0DTE, and event and prediction is really just sort of coming at it from a different way, but that’s something that we have demonstrable expertise and success in.”

Sports Not on Cboe PM Agenda

It appears sports event contracts won’t be part of Cboe’s prediction market plans and that’s potentially smart move for multiple reasons, including the fact that those derivatives are drawing the ire of regulators in a slew of states.

Additionally, the sports event contracts space is fraught with competition. That includes established players such as Kalshi and Novig as well as imminent entries by DraftKings and FanDuel. Plus, Polymarket is returning to the US at some point this month.

In the financial services world, there is some precedent for offering event contracts sans sports. Interactive Brokers (NASDAQ: IBKR) is an example of a trading house that has found some success confining its yes/no derivatives offering to economic data and financial instruments.