CBOE Is Challenging Kalshi and Polymarket With a New Prediction Market Product

CBOE has made a major move to enter the prediction market industry after it launched a new set of contracts tied to the S&P 500.

The new platform would be called CBOE Predicts. It introduces binary-style contracts that would allow traders to make predictions on where the Mini-S&P 500 Index (XSP) will close. Traders would be able to take a "yes" or "no" position on market outcomes instead of buying stocks or traditional options.

The launch is the platform’s first step into the prediction markets, which have since grown in popularity over the past year thanks to platforms like Kalshi and Polymarket. The new CBOE contracts are available through Interactive Brokers in the meantime, with Charles Schwab expected to offer access later this year.

CBOE returns to a market it left behind

Interestingly, this is not the exchange’s first time offering prediction-style services. Back in 2008, the exchange launched binary options linked to the S&P 500 and the CBOE Volatility Index. But those products did not attract enough interest to stay afloat. They were eventually discontinued in 2017.

Things have changed since then. Prediction markets have seen interest grow at a remarkable rate. Investors are now looking for ways to share their views and still make money. Kalshi and Polymarket, especially, have shown that traders are willing to stake on outcomes of events instead of the usual traditional investing.  

CBOE had initially shared plans to enter the prediction markets during its earnings call at the end of 2025. Now, the plan has been actualized with this first and unique offering.

“Following the success of SPX 0DTE options, we have seen continued customer demand for shorter-dated, outcome-based trading,” JJ Kinahan, head of alternative investment products, said. “With Cboe Predicts, we are expanding that choice by offering simple ‘yes-or-no’ payout event contracts.”

Growing competition in prediction markets

CBOE enters the space at a time when competition has become increasingly intense. Kalshi and Polymarket have been the main players in the space for a while now. However, other financial institutions are now joining. 

Charles Schwab is preparing to launch a similar offering later this year. Nasdaq also received its approval to list its own binary index products. Just yesterday, Meta shared that it is developing a prediction market application called Arena.

Notably, Kalshi and Polymarket generated around $24 billion in global trading volume in just April alone. This was a huge jump from less than $5 billion recorded in September last year. Meanwhile, Kalshi is now considering IPO plans as its platform continues to grow in trading volume. This just  shows how quickly the industry is growing

CBOE believes it's offering something slightly different from these platforms. Alongside traditional binary contracts, the exchange also introduced what it calls a "plus" feature. 

This would allow traders to get partial payouts depending on how close their prediction is to the market result. Basically, it differs from the all-or-nothing outcome as seen with others. This gives investors more flexibility and allows them to manage risk easily