Key Takeaways:
CBOE enters the prediction market arena with a new platform, joining a sector that recorded $23.8 billion in trading volume in April.
CBOE Global Markets launched CBOE Predicts, a prediction market platform, becoming the first major US exchange to enter a sector that recorded $23.8 billion in trading volume in April, according to Pew Research. The platform will list a new series of event contracts covering economic data releases, monetary policy decisions and other outcomes.
"Prediction markets represent a natural extension of our core competency in event-based trading," a CBOE spokesperson said. "CBOE Predicts will offer investors a regulated venue to trade on the outcome of economic, political and cultural events."
The move follows Meta's reported development of a prediction market app called Arena and the entry of sports betting giants DraftKings and FanDuel into the space over the past year. Kalshi, the leading US prediction market platform, processed about $18.5 billion in sports-related volume alone in the past month, according to data from research firm TickerTracker. Polymarket's US-facing site, launched in May, saw sports markets account for about 99 percent of its $2.1 billion in monthly volume.
CBOE's entry signals a shift in prediction markets from crypto-native platforms like Polymarket and Kalshi toward regulated exchange infrastructure. The sector's explosive growth has drawn scrutiny from addiction experts and state regulators who argue the platforms facilitate gambling among users as young as 18, while the platforms maintain their event contracts are structurally no different from trading futures.
The modern prediction market traces its roots to 1988, when three University of Iowa economists launched the Iowa Political Stock Market with 200 traders and wagers capped at $500. That experiment accurately forecast George H.W. Bush's 53.2 percent share of the popular vote. Nineteen economists later laid out their vision in a 2008 paper in Science titled "The Promise of Prediction Markets," arguing that such markets "should be freed of unnecessary government restrictions."
The reality has diverged sharply from that vision. The economists assumed markets would "presumably not include contracts on the outcomes of sports events" and proposed capping individual wagers at about $2,000 per year. Today, sports betting dominates the sector. Justin Wolfers, a University of Michigan professor and co-author of the 2008 paper, told CNN: "This is not the future any of us were hoping for."
CBOE's entry as a regulated exchange could reshape the regulatory debate. Unlike Polymarket and Kalshi, which operate under CFTC oversight for some products while facing questions about whether their offerings constitute gambling, CBOE brings decades of regulatory compliance infrastructure. The exchange already operates the world's largest options market and the VIX volatility index.
A New York Federal Reserve study in March found that credit delinquencies, especially among people under 40, have surged in the more than 30 states that legalized sports gambling since 2018, when the Supreme Court overturned a federal ban. Danny Funt, author of "Everybody Loses," which chronicles the sports betting boom, said: "The evidence is becoming undeniable that there's rising rates of addiction, especially among young men."
CBOE did not disclose the specific contract types or launch date for its first CBOE Predicts products. The exchange said it will provide further details in the coming weeks.
This article is for informational purposes only and does not constitute investment advice.
