In the US, the prediction market has begun to split into two regulatory models. Cboe Global Markets launched Cboe Predicts with binary contracts on the Mini-S&P 500 Index and immediately integrated the product into the options market infrastructure.
This is an important difference from Kalshi and Polymarket. Their contracts remain the subject of disputes with regulators and states, while Cboe is following the familiar Wall Street route under SEC oversight.
The New Product Resembles a Prediction Market
Cboe contracts are traded under the tickers XSPBW and XSPBX. Economically, they are similar to events on Kalshi or Polymarket: an investor buys a “yes” position and receives $100 if the index closes at the specified level or higher. If the condition is not met, the payout is zero.
The difference is not in the mechanics, but in the legal framework. This is not a classic contract on a political or sporting event, but a binary option on a stock index.
That is why Cboe can use existing options market rules. The contracts go through the Options Clearing Corporation and operate under SEC supervision.
Wall Street Finds a Safer Route
For large brokers and exchanges, the legal structure is more important than the idea of predictions itself. If the product can be structured as an exchange-traded option, it does not fall into the same risk zone where Kalshi and Polymarket are now.
Cboe launched the product on Interactive Brokers. In the coming months, access should also become available to Charles Schwab clients.
This is especially telling. As recently as the end of 2025, Schwab CEO Rick Wurster said that prediction markets were not among the company’s priorities and that sports contracts blur the line between betting and investing. Now Schwab is preparing to offer a similar model through the accounts of 47.2 million clients and infrastructure with $11.8 trillion in assets.
Legal Risk Turned Out To Be the Main Difference
Cboe Predicts is functionally similar to a prediction market, but looks different from a regulatory perspective. The product does not require separate registration with the CFTC as an event market and does not directly face state gambling laws.
These are the very problems Kalshi and Polymarket are now fighting. On the day Cboe Predicts launched, the Commodity Futures Trading Commission filed a lawsuit against Kentucky, defending the federal status of Kalshi and Polymarket.
This is already the ninth such dispute at the state level. As a result, the market has a rare picture: one participant calmly launches prediction contracts through the SEC, while others simultaneously defend a similar industry in court.
Nasdaq Has Already Opened the Door for This Model
Cboe is not the first major platform to take this path. At the end of April, the SEC approved Nasdaq’s application to list binary options on the Nasdaq 100 and Nasdaq 100 Micro Index.
This effectively created a regulated category of prediction products within the securities market. Cboe is now using a similar logic for the Mini-S&P 500 Index.
Intercontinental Exchange, the owner of NYSE, chose another path. The company did not launch a similar product directly, but invested in Polymarket and took on the role of global data distributor for the platform for institutional clients.
Major Exchanges Chose Different Paths
The three largest US exchange operators are now entering the prediction market in different ways. Nasdaq and Cboe use the binary options structure under the SEC. ICE is betting on partnership with Polymarket and event market data.
This shows that Wall Street is no longer ignoring the segment. In two years, trading volume on prediction markets has grown hundreds of times, and Kalshi and Polymarket have already become too prominent for traditional exchanges to stay on the sidelines.
According to The Block, in May Kalshi’s volume reached $16.81 billion, and Polymarket’s — $7.08 billion. This dynamic explains why major platforms are looking for their own way into this market.
The Gaming Industry Demands To Close the Loophole
Opponents of the federal model are also increasing pressure. The American Gaming Association believes that event contracts, especially in sports, effectively bypass betting regulation.
Association head Bill Miller criticized the CFTC’s proposed approach and called on Congress to support the Prediction Markets Are Gambling Act. This bill would prohibit the CFTC from allowing contracts on sporting events.
According to the association, states and tribal jurisdictions have already lost more than $1 billion in tax revenue due to prediction markets. For the gaming business, this is not a technological dispute, but a matter of taxes, licenses, and control over the betting market.
A Blow to the CFTC Will Not Affect Cboe Directly
Even if Congress restricts sports event contracts under the CFTC, Cboe Predicts may remain outside this line of attack. The product is under the SEC and structured as an options instrument.
This makes the Cboe model potentially more resilient. It does not conflict with state gambling laws and does not require proving that an event contract is not a bet.
But this structure also narrows the market. Cboe works with financial indexes, not politics, sports, or cultural events. Therefore, the product may be legally cleaner but less broad in topics than Kalshi or Polymarket.
Cboe Expands the Boundary Between TradFi and Crypto
The launch of Cboe Predicts fits into a broader trend. The exchange is also considering turning perpetual futures on bitcoin and Ethereum into instruments similar to perpetual contracts.
This direction is already being tested by crypto platforms and regulated participants. After CFTC approval for Kalshi and Coinbase, major exchanges are beginning to cautiously transfer crypto-native mechanics into the traditional regulated framework.
For Cboe, the key advantage is infrastructure. The exchange can take ideas that originated in crypto and prediction markets, but package them into products that are understandable to brokers, clearing organizations, and regulators.
What’s Next?
The prediction market in the US is entering a phase of division. One path leads through the CFTC, Kalshi, Polymarket, and legal battles with states. The other goes through the SEC, options, and the infrastructure of major exchanges.
Which format will become dominant by 2028 is still unclear. If Congress restricts event contracts, products like Cboe Predicts will have the advantage. If Kalshi and Polymarket win key court battles, the market will remain broader and closer to its current form.
The main takeaway is simple. Cboe did not just launch a new product on the S&P 500 index. It showed how Wall Street can enter prediction markets without direct conflict with the CFTC and gambling laws. Now the main question is which regulatory route will survive after market consolidation.
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