Wall Street's three largest exchange operators have each chosen a different regulatory path into prediction markets, creating a bifurcated landscape where traditional finance sidesteps the legal battles that crypto-native platforms face. Cboe Global Markets launched its Cboe Predicts suite on June 23 with binary option contracts on the Mini-S&P 500 Index, while Nasdaq received SEC approval in April to list binary options on the Nasdaq 100, and Intercontinental Exchange (ICE), parent of the New York Stock Exchange, invested up to $2 billion in Polymarket directly. The moves highlight a fundamental regulatory split: traditional exchanges can offer prediction-like products under SEC oversight of options rules, while crypto platforms like Kalshi and Polymarket battle state gambling laws and CFTC jurisdiction questions.

What Are These New Wall Street Prediction Markets?

Cboe Predicts works economically like Kalshi and Polymarket event contracts. Traders buy "yes" or "no" positions on whether the Mini-S&P 500 Index will settle at or above a specified level. A correct prediction pays $100; an incorrect one pays $0. The contracts launched live on Interactive Brokers on June 23 and will roll out to Charles Schwab in the coming months, giving retail investors access through platforms managing $11.8 trillion in assets and serving 47.2 million accounts.

The critical difference lies in regulatory structure. Cboe Predicts clears through the Options Clearing Corporation and trades under SEC-supervised options rules. There is no CFTC registration question and no state gambling-law exposure of the kind Kalshi faces in Kentucky. Nasdaq's binary options on the Nasdaq 100 and Nasdaq 100 Micro Index follow the same SEC-regulated path after the SEC approved Nasdaq's proposal on April 30.

How Are Traditional Exchanges Entering Prediction Markets?

• Cboe's Approach: Launched binary options on the Mini-S&P 500 Index (XSPBW and XSPBX) under SEC options oversight, clearing through the Options Clearing Corporation with no CFTC or state gambling-law exposure.
• Nasdaq's Strategy: Received SEC approval on April 30 to list binary options on the Nasdaq 100 and Nasdaq 100 Micro Index, following a filing in early March and adopting the same SEC-regulated options framework.
• ICE's Investment Model: Committed up to $2 billion to Polymarket at an $8 billion pre-investment valuation in October 2025, completed a $600 million additional cash investment on March 27, and became the global distributor of Polymarket event-driven data to institutional clients.

Charles Schwab CEO Rick Wurster told the Wall Street Journal in December 2025 that prediction markets were "not high on our list at the moment," citing concerns that sports event contracts muddied the line between gambling and investing. Yet Schwab now plans to offer XSP binary options through its massive retail network, demonstrating how a regulatory wrapper can transform a company's appetite for the product category.

Rick Wurster

Why Does the Regulatory Split Matter?

The timing of Cboe's launch is striking. On the same day Cboe Predicts went live, the CFTC sued Kentucky in its ninth state suit defending Kalshi and Polymarket against state gambling laws. This regulatory bifurcation in real time reveals the stakes: crypto platforms operate in legal limbo, fighting battles in multiple states, while traditional exchanges use existing SEC infrastructure to offer functionally identical products with zero gambling-law risk.

Kalshi handled $16.81 billion in trading volume in May, compared to Polymarket's $7.08 billion, and prediction-markets trading volume has grown 393-fold over the past two years. Yet this explosive growth masks a regulatory fragmentation that could reshape the market's structure by 2028.

The gaming industry is moving to close the regulatory gap that makes both tracks possible. American Gaming Association president Bill Miller called the CFTC's June 10 proposed framework "a remarkable attempt to redefine what constitutes sports betting" and on June 22 sent Congress a letter urging passage of the Prediction Markets Are Gambling Act, the Curtis-Schiff bill that would prohibit the CFTC from permitting sports event contracts. The AGA estimates states and tribes have lost more than $1 billion in tax revenue to prediction markets.

"A remarkable attempt to redefine what constitutes sports betting," Bill Miller, president of the American Gaming Association, said of the CFTC's June 10 proposed framework.

Bill Miller, President, American Gaming Association

Bipartisan congressional action against the CFTC track would not affect Cboe Predicts, which sits under SEC jurisdiction entirely. This asymmetry means the regulatory consolidation now underway will likely favor traditional exchanges offering SEC-regulated binary options over crypto platforms fighting state-by-state gambling battles.

Cboe is also weighing converting Bitcoin and Ether continuous futures into perpetual-style contracts, mirroring the May 29 CFTC approval for Kalshi and Coinbase. The exchange is moving methodically into product categories that crypto-native platforms built first, using its SEC and CFTC-registered infrastructure as the differentiator. The track that survives the regulatory consolidation will define what a U.S. prediction market looks like in 2028.