Cboe Eyes Regulated Prediction Markets With Options-Style Payoffs

Cboe Global Markets needs to maintain it easy with their foray into the prediction market — however is it as straightforward as they suppose? The Chicago-based venue for choices buying and selling confirmed that it was in early talks with brokerages and market makers, in line with a Feb. 2 report within the Wall Street Journal.

At first, one may say, so what? In an area with Kalshi, Polymarket, Gemini, Coinbase and Robinhood, what’s yet another prediction market?

Cboe is supposedly exploring a possible “regulated product” that might use “an choices construction to supply all-or-none payouts,” in line with a report from Reuters. This could be a binary-style payoff that might ship a hard and fast return if a specified situation have been met, and return nothing if the situation shouldn’t be met.

Cboe, per the WSJ report, will focus strictly on monetary markets. So, yes-no markets on issues like if the S&P 500 will shut at a sure level on the finish of buying and selling.

“Although retail participation in derivatives markets has grown considerably through the years, a binary, all-or-nothing choices product would definitely enchantment to much less skilled traders,” Nic Puckrin, analyst and co-founder of Coin Bureau, informed Reuters.

Is regulation a superb factor for prediction markets?

As anybody who bought GameStop stock during 2021 is conscious, shares might be manipulated. So, Cboe hopes to supply a “regulated different.” These proposed contracts would meet strict compliance requirements and work carefully with regulators to make sure there’s correct oversight earlier than itemizing.

A prediction market looking for extra regulation, not much less, is uncharacteristic. This angle seems to align with Commodity Futures Trading Commission Chair Michael Selig’s philosophy on prediction market regulation.

Selig needs the CFTC to ship the “minimal dose” of regulation after claiming President Joe Biden’s CFTC engaged in “policymaking by enforcement.”

If Cboe needs to draw merchants who know their bets are on the up-and-up, implementing its personal market regulation and rule enforcement (one thing the CFTC is in no rush to do) is the way in which to go.

Don’t name it a (CBoe) comeback

Bloomberg reported in November 2025 that Cboe was planning to launch its personal prediction markets tied to monetary occasions.

“It’s shifting shortly, however on the identical time, I additionally suppose it’s nonetheless early levels,” Cboe’s Chief Executive Officer Craig Donohue informed the publication. “Our focus proper now could be on our personal natural efforts, which I hope will come to fruition within the subsequent a number of months.”

The interview got here on the time that Cboe’s chief rival, CME Group, introduced that it will accomplice with FanDuel to energy a brand new prediction market-focused app.

Cboe may even shun the attract of sports activities betting. “I do know there’s in all probability the potential to generate profits there,” Donohue mentioned. “It’s additionally fraught with plenty of litigation and plenty of regulatory danger as effectively, in order that’s for different folks. But for Cboe, we’re going to stay centered on issues which have monetary and financial implications.”

Cboe first tried a makeshift prediction market in 2008. They launched binary name choices tied to the S&P 500 and the Cboe Volatility Index (VIX). These markets allowed merchants to wager on the place these indexes would shut, however they did not catch on. Eventually, Cboe delisted the markets and moved on.

What’s completely different about Cboe’s new options-style prediction markets?

However, this new initiative isn’t just those self same previous markets with a recent coat of paint. Instead, as Coindesk reports, Cboe is exploring “methods to modernize the idea and enchantment to a broader base of retail and institutional customers.” A primary objective is to provide a greater end-user expertise, with extra intuitive market entry or clearer contract phrases.

While Cboe needs to maintain it easy, that’s simpler mentioned than achieved. Polymarket has every day S&P markets and Kalshi is all about monitoring the worth of crypto. Is CBoe betting on there being an untapped buyer base of day merchants who aren’t on these markets? If so, are there sufficient to maintain the revitalized Cboe market open? 

For some, Cboe’s clear regulation is interesting. Knowing that the market is honest – you by no means need to argue the paradox of an integer – is interesting. But, Cboe must be open and up entrance with how their prediction markets can be regulated. Otherwise, speculators may simply follow the opposite gamers on this more and more crowded market. 

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