Cboe, an options exchange, enters the prediction market with a focus on financial and economic events
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Cboe, an options exchange, enters the prediction market with a focus on financial and economic events
Cboe, a pioneer in options market trading, has announced its entry into the prediction market, eschewing the sports trend and firmly pursuing a financial stability strategy by planning to launch proprietary products linked to financial outcomes and economic events.
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According to foreign media reports, Cboe Global Markets Inc. plans to launch its own prediction market business within months, but unlike some competitors, the company will not venture into sports-related products for now, focusing instead on financial and economic events.
The Chicago-based derivatives exchange operator becomes one of the latest exchange firms to enter the emerging and rapidly growing prediction market industry, which offers federally regulated event contracts similar in form to traditional betting products.
Cboe CEO Craig Donohue said in an interview that unlike other financial institutions partnering with prediction market startups or sports betting companies, Cboe intends to launch its own products tied to financial outcomes and economic events.
Currently, U.S. prediction markets mainly use platforms such as Kalshi and Polymarket to transform various events—such as government shutdown duration, probability of Fed rate cuts, economic data releases, and commodity prices—into tradable contracts, offering trading opportunities for users with judgment or research capabilities.
"This space is developing quickly, but I think it's still early days," Donohue said in the interview. "Our current focus is on organic development, and we hope to see results in the coming months."
Just on Wednesday, Cboe's rival CME Group Inc. announced it would partner with FanDuel, the online sports betting division of Flutter Entertainment Plc, to launch a consumer app centered on prediction markets.
Since winning a federal court ruling last year, prediction market exchange Kalshi has used event contracts to bypass state regulations on online gambling. Meanwhile, its competitor Polymarket said on Wednesday it is relaunching services for U.S. customers after relocating operations due to prior legal disputes.
While sports betting represents the fastest-growing segment of the prediction market business, Donohue said Cboe will avoid this area due to legal uncertainty. "I know there might be substantial profit potential," he said,
"but it also comes with significant litigation and regulatory risks—that's someone else's battlefield. For Cboe, we will continue focusing on areas with financial and economic impact."
In recent years, Cboe has adjusted its expansion strategy, shifting emphasis from acquisitions to internal growth.
"I believe our best growth opportunities still come from our core large-scale businesses," Donohue said in another interview. "In recent years, we've consistently seen strong growth among retail clients." As individual investor speculation increases, U.S. capital markets are also becoming more globalized.
Donohue believes prediction markets will attract a new audience who may later engage with other Cboe products, such as short-term options contracts. However, he noted that sports-related trading carries excessively high risks.
"The last thing you want to do is make big money off people who can't profit sustainably in the market," he said.
Cboe's stock has risen about 30% this year, outperforming rivals CME Group and Intercontinental Exchange, and hit a record high on Monday.
Cboe, known for pioneering the options market in the 1970s, has transformed from a traditional trading floor into an electronic trading platform. The company acquired Bats Global Markets in 2017 to expand into equities, exchange-traded funds, and foreign exchange trading. Donohue said prediction markets offer the firm further opportunities for expansion,
"We know there is significant demand in the market from investors wanting to express views on index movements, stock market volatility, individual stock options, and securities price changes."
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