In January 2026, prediction platforms Kalshi and Polymarket shattered records with a staggering $17 billion in monthly trading volume—a roughly 45% increase over the previous month. This explosive growth has caught the attention of traditional financial powerhouses. Cboe Global Markets is now in early talks with retail brokers and market makers, planning to relaunch "all-or-nothing" binary options contracts aimed at individual investors.
Market Transformation
Wall Street veteran Cboe is quietly preparing a counteroffensive. According to The Wall Street Journal, this major global options exchange is exploring a return to retail-focused "all-or-nothing" binary options. These contracts let investors place straightforward bets on the outcome of specific events: if the event occurs, they receive a fixed payout; if not, they lose their entire investment.
Rob Hocking, Cboe’s Global Head of Derivatives, made the company’s intentions clear: "We want to enter the event-driven contracts space and offer simple event-based products similar to those on other platforms." This strategy is a direct response to the rapid rise of prediction markets.
The Rise of Prediction Markets
Prediction markets are not a new concept, but their popularity has soared since the last U.S. presidential election. These platforms allow traders to bet on the outcomes of real-world events—from sports and entertainment releases to elections and economic data. Kalshi, the largest regulated prediction market in the U.S., experienced explosive growth in 2025. The platform’s total trading volume reached $23.8 billion, an increase of over 1,100% from the previous year. On January 12, 2026, the industry set a new single-day record with $701.7 million in trading volume.
The crypto industry has moved quickly to capitalize on this trend. On January 27, 2026, Coinbase announced a partnership with Kalshi to launch prediction markets across all 50 U.S. states. Now, users can trade event contracts directly on the Coinbase interface using USD or USDC, betting on outcomes in politics, sports, entertainment, and macroeconomic indicators.
Cboe’s New Strategy
Cboe’s comeback plan is highly strategic. Unlike in 2008, when binary options were first introduced, today’s retail investors are much more comfortable with complex financial products. According to the Options Clearing Corporation, the average daily volume of options contracts hit a record 61 million in 2025. This shows that investors are moving beyond traditional stocks and ETFs, exploring more sophisticated trading instruments.
JJ Kinahan, a Cboe executive, noted, "For many people, this represents a new entry point into the world of options." The exchange aims to attract new investors with these simplified products and gradually guide them toward more complex options contracts. In October 2025, Cboe Global Markets CEO Craig Donohue stated the company would focus on event and prediction markets, as well as digital and cryptocurrency markets, highlighting strong growth in these areas.
Regulatory Challenges and Opportunities
As prediction markets expand rapidly, regulatory issues have come to the forefront. At the FIA Expo in November 2025, Cboe CEO Craig Donohue voiced concerns about the current regulatory approach to prediction contracts. He specifically pointed to binary options on the S&P 500 index offered by Kalshi, arguing that these products are "clearly security-based binary options" and should fall under SEC regulation, not the Commodity Futures Trading Commission.
Under the current U.S. regulatory framework, regulated exchanges can "self-certify" contracts and list them within 24 hours, without waiting for a full review. Donohue questioned this process: "I’m not sure that’s happening in the right way." The core appeal of prediction markets lies in their ability to turn information into tradable assets. Wedbush Securities noted in its analysis that prediction markets have evolved from "speculative casinos" into the world’s most efficient "truth machines," forming the foundation of the "information asset class."
The Crypto Market Connection
As traditional finance and prediction markets converge, crypto traders on Gate are seeing some interesting trends. As of February 3, 2026, the Bitcoin price stands at $78,051.10, up 2.54% over the past 24 hours; the Ethereum price is $2,305.57, up 2.82% in the same period.
The rise of prediction markets reflects investors’ growing demand for more direct and transparent market signals—values that closely align with the core propositions of the crypto market. As institutional investors pour into both sectors, the links between them are likely to deepen. Kalshi’s decision to use Coinbase Custody for its USDC reserves demonstrates how crypto infrastructure is supporting the growth of emerging financial markets. This partnership boosts traders’ confidence in the stability and security of event contracts.
A Reshaped Competitive Landscape
Cboe’s move marks a formal response from traditional exchanges to the rise of prediction markets. This is more than just a product rivalry; it’s a strategic shift to adapt to evolving investor preferences. The rapid growth of prediction market platforms like Kalshi and Polymarket has drawn intense interest from financial giants. In 2025, Intercontinental Exchange invested $2 billion in Polymarket, signaling the parent company of the New York Stock Exchange’s desire to control the "event-driven data" pipeline.
CME Group also entered the space, partnering with FanDuel to launch a prediction market platform in five U.S. states in December 2025. The entry of these traditional players signals that event-driven trading is becoming a mainstream financial product. With the 2026 U.S. midterm elections approaching, trading volume in political event contracts is expected to hit new records. Market analysts predict that, if current trends continue, single-day trading volume could surpass $1 billion before November.
As regulatory frameworks become clearer, the lines between traditional financial giants and emerging prediction platforms are blurring. Kalshi’s valuation has surpassed $10 billion, while Polymarket has gained fresh momentum following Intercontinental Exchange’s massive investment. Coinbase’s decision to integrate prediction markets into its main trading platform shows that these products have moved from the fringes of crypto experimentation to a core feature attracting mainstream users. In the coming months, whether Cboe’s "all-or-nothing" options can win over retail investors will be a key test of whether traditional exchanges can keep pace with the rapidly evolving financial landscape.
