Cboe Global Markets is set to introduce a new prediction markets platform within the upcoming months, according to CEO Craig Donohue in a conversation with Bloomberg. This move marks Cboe as the latest significant U.S. exchange operator to enter the rapidly expanding event contracts market. However, in contrast to several competitors, Cboe will not offer sports-related products.
The Chicago-based exchange plans to provide yes/no event contracts linked to economic indicators and outcomes in financial markets. Donohue indicated that this direction aligns perfectly with Cboe’s established strengths in derivatives and retail-oriented trading.
“Currently, our emphasis is on our organic initiatives, which I expect will materialize in the next few months,” Donohue stated in his interview with Bloomberg. He elaborated that prediction markets “fit seamlessly with our primary expertise” and possess the potential to attract a new demographic that may later migrate to Cboe’s other instruments, including short-duration options.
Cboe is joining rivals CME Group and Intercontinental Exchange in a deeper foray into prediction markets, a sector witnessing swift expansion as federally regulated event contracts increasingly replicate traditional gambling offerings. Last month, ICE poured $2 billion into Polymarket, raising the valuation of the prediction platform to nearly $10 billion, while CME has collaborated with FanDuel to enhance a consumer-oriented sports contracts app.
However, Cboe intends to completely avoid sports markets, citing significant regulatory scrutiny and ongoing legal proceedings regarding whether sports-based event contracts breach state gambling statutes. “I recognize the potential for profit in that area,” Donohue remarked. “However, it carries substantial litigation and regulatory risks, so that is territory for others. At Cboe, we plan to focus on items with financial and economic significance.”
Competitors focused on sports, like Kalshi and Novig, alongside upcoming entrants FanDuel and DraftKings, are anticipated to saturate the market, while Polymarket is working on reintroducing services to U.S. users after earlier regulatory hurdles.
Cboe’s expansion is taking place amid robust momentum in its core operations. In October, options trading across its four U.S. exchanges soared to a record 21.4 million average daily contracts, propelled by index options and the demand for zero-days-to-expiry (0DTE) products. Cboe’s stock has surged over 30% this year, outpacing competitors CME and ICE.
Although prediction markets are still in their nascent stages, they signify a natural extension for the company, according to Donohue. “There is a growing interest in expressing opinions regarding index movements, shifts in equity markets, and specific equity options and securities,” he pointed out.
Donohue, who assumed the CEO role in May, expressed that the company perceives its most substantial growth opportunities through organic growth rather than mergers and acquisitions, enhancing Cboe’s lengthy evolution from an options innovator to a global multi-asset exchange operator.