Cboe Joins the Yes-No Economy, Takes Aim at Kalshi and Polymarket 🎯

Cboe Global Markets has entered the prediction markets business with the launch of Cboe Predicts, a new suite of outcome-based products debuting with binary option contracts tied to the Mini-S&P 500 Index (XSP). The contracts, listed under the symbols XSPBW and XSPBX, are now available through Interactive Brokers and are expected to roll out at Charles Schwab and other retail brokerage platforms in the coming months, according to a Tuesday press release. The launch marks Cboe's re-entry into binary options after it first introduced such products on the S&P 500 and VIX in 2008 and later withdrew them due to insufficient investor demand.

Each contract allows traders to take a "yes" or "no" position on whether the S&P 500 will close above or below a specified price level. Contracts tied to the S&P 500's daily closing price are already available on prediction market platforms such as Polymarket and Kalshi. Cboe's new contracts are security options that will trade within the same regulatory framework as US-listed options, providing "institutional-grade liquidity" and transparency, the company said.

The move reflects rising demand for shorter-dated, outcome-based trading opportunities. "Cboe's customers are showing more demand for shorter-dated, outcome-based trading opportunities," said JJ Kinahan, head of retail expansion and alternative investment products at Cboe, according to the announcement. Cboe is the latest traditional finance firm to expand into prediction markets as investor interest in event contracts grows.

The launch comes days after reports that Charles Schwab was seeking to enter the sector through a partnership with Cboe that would offer customers similar S&P 500-linked contracts. Prediction market platforms have drawn increased regulatory scrutiny over political betting and sports-related event contracts. Kentucky was the latest state to sue five prediction market platforms, including Kalshi and Polymarket, accusing them of "operating unlicensed and illegal sports betting and gambling platforms," as reported on Thursday. In January, US lawmakers proposed legislation aimed at restricting political prediction market trading by government officials after a Polymarket user netted over $400,000 on a contract related to the removal of then-Venezuelan President Nicolás Maduro, fueling insider trading concerns. Kalshi has also added India to its growing list of restricted jurisdictions.