CME, FanDuel Taking Fight to Prediction Markets with Financial Contracts

• Companies are teaming up on yes/no contracts on commodities, stock indexes, economic data and more
• CME, FanDuel are forming a joint venture
• Could be blow to Kalshi

Possibly rocking the burgeoning prediction markets industry, CME Group (NASDAQ: CME) and FanDuel said today they’re partnering to bring yes/no event contracts based on economic data and financial markets to the sportsbook’s clients.

The exchange operator and the gaming company expect to have those offerings live later this year. The derivatives will include yes/no contracts on the daily performances of major equity indexes, such as the Nasdaq-100 and S&P 500, commodities, cryptocurrencies, and economic data reports, including GDP and inflation. The derivatives will cost as little as $1. Other contracts could offered in the future.

Speaking of Kalshi, the CME/FanDuel partnership could be a blow to that firm because recent rumors suggested the gaming company and the prediction market were in talks on a potential deal.

CME, FanDuel Partnership Could Lure Young Bettors, Traders

As highlighted by Robinhood Markets (NASDAQ: HOOD) offering football derivatives, financial exchanges with younger client bases are offering gamified trading with some industry observers saying those companies are blurring the line between betting and investing. FanDuel, a unit of Flutter Entertainment (NYSE: FLUT), appears to be hip to client demands.

We believe there is potentially a wide audience for trading event-based markets and we want to provide a platform that allows our customers to engage in this activity,” said CEO Amy Howe in a statement.

FanDuel offers online sports wagering in 22 states and Puerto Rico and Washington, DC with Missouri soon to join that list. In nearly all of those markets, FanDuel ranks first or second in internet sports betting market share. The company says it has more than 12 million users, indicating the CME partnership could start on solid footing.

Many of those clients skew younger and are active traders and investors on platforms like Robinhood, potentially signaling the arrangement with CME could be fruitful.

As part of their agreement, CME and FanDuel will create a new joint venture structured as a non-clearing futures commission merchant (FCM) that will be regulated by the CFTC as is the case with Kalshi and other prediction market operators.

Financial Prediction Markets  Have Established Success

There are established, successful test cases for prediction markets linked to financial assets. Prior to moving into sports, those were marquee offerings on Kalshi and Polymarket.

Interactive Brokers, another brokerage firm popular with active traders, has experience in finance-related event contracts. In 2024,it launched its ForecastEx platform, which allows bets on economic data such as consumer sentiment, inflation, and the monthly jobs reports.

With CME and FanDuel partnering and prediction markets encroaching further into the world of sports, other gaming companies could be on the clock to make related moves. Some have said they’re staying abreast of goings on in the yes/no event contracts space and others have been tied to unconfirmed acquisition rumors.