Cboe launches S&P 500 prediction markets as CFTC sues Kentucky over Kalshi and Polymarket

Cboe Global Markets launched its prediction-markets suite on June 23 with binary option contracts on the Mini-S&P 500 Index, listed as XSPBW and XSPBX. The contracts went live on Interactive Brokers Tuesday and roll out to Charles Schwab in the coming months. 

The XSP contracts work like Kalshi and Polymarket event contracts economically. A “yes” position pays $100 if the index settles at or above a specified level and $0 otherwise.

The contracts clear through the Options Clearing Corporation and trade under SEC-supervised options rules. There is no CFTC registration question and no state gambling-law exposure of the kind Kalshi faces in Kentucky.

Schwab CEO Rick Wurster told the Wall Street Journal in December 2025 that prediction markets were “not high on our list at the moment,” casting sports event contracts as muddying the line between gambling and investing.

Schwab now plans to offer XSP binary options through its 47.2 million accounts and $11.8 trillion in assets. The product is functionally a prediction market. The legal exposure is not.

Nasdaq cleared this path two months ago

Cboe is following Nasdaq into the SEC-regulated prediction-market category. The SEC approved Nasdaq’s proposal on April 30 to list binary options on the Nasdaq 100 and Nasdaq 100 Micro Index, after Nasdaq filed in early March. Intercontinental Exchange, the parent of the NYSE, took a parallel approach by investing in Polymarket directly.

ICE committed up to $2 billion in October 2025 at an $8 billion pre-investment valuation and completed a $600 million additional cash investment on March 27, becoming the global distributor of Polymarket event-driven data to institutional clients.

Wall Street’s three largest exchange operators have now each picked a track into prediction markets. Kalshi handled $16.81 billion in May volume against Polymarket’s $7.08 billion, per The Block, and prediction-markets trading volume has grown 393-fold over the past two years.

The AGA wants Congress to shut the federal track entirely

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. Bipartisan congressional action against the CFTC track would not affect Cboe Predicts, which sits under SEC jurisdiction entirely.

As Cryptopolitan reported Monday, 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 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 US prediction market looks like in 2028.