CME, FanDuel Taking Fight to Prediction Markets with Financial Contracts

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Companies are teaming up on yes/no contracts on commodities, stock indexes, economic data, and more.
CME, FanDuel are forming a joint venture.
This could pose a challenge to Kalshi.

In an exciting development that could reshape the prediction markets landscape, CME Group (NASDAQ: CME) and FanDuel have announced their partnership to introduce yes/no event contracts. These contracts will be based on varying economic data and financial markets, catering directly to the sportsbook’s clients.

The CME Group logo. The exchange operator and FanDuel announced a new prediction markets agreement. (Image: CME Group)

Set to go live later this year, these derivatives will encapsulate yes/no contracts that address the daily performances of major equity indexes including the Nasdaq-100 and S&P 500, as well as commodities, cryptocurrencies, and significant economic indicators like GDP and inflation. The cost for these derivatives will start as low as $1.

This partnership comes on the heels of Kalshi — one of the most prominent players in suggestion markets — as it seeks to extend its reach into sports-related contracts. According to recent regulatory filings, Kalshi indicated plans to introduce yes/no derivatives on football player props, as well as sides and totals, unless restricted by the Commodities Futures Trading Commission (CFTC).

The CME/FanDuel partnership is touted to be potentially detrimental to Kalshi, especially considering the recent gossip surrounding talks of a possible collaboration between the prediction market and the gaming company.

CME, FanDuel Partnership Could Lure Young Bettors, Traders

As reported by Robinhood Markets (NASDAQ: HOOD), which recently launched football derivatives, financial exchanges targeting younger demographics are engaging in gamified trading experiences. Some industry experts are suggesting that these offerings are blurring the lines between investing and traditional betting. This appears to give FanDuel an edge in understanding client demands effectively.

We believe there is potentially a wide audience for trading event-based markets, and we want to provide a platform that allows our customers to engage in this activity,” said CEO Amy Howe in a statement.

FanDuel currently provides online sports wagering across 22 states, as well as Puerto Rico and Washington, DC, with Missouri set to join the list soon. In most of these locations, FanDuel holds one of the top spots in terms of internet sports betting market share, boasting over 12 million active users. This solid user base indicates that the new CME partnership could gain traction rapidly.

The client demographic notably skews younger and includes active traders engaged on platforms like Robinhood, suggesting that this collaboration with CME could indeed be promising.

Under the terms of their agreement, a new joint venture will be established between CME and FanDuel, functioning as a non-clearing futures commission merchant (FCM), which will be regulated by the CFTC, similar to Kalshi and its fellow prediction markets.

Financial Prediction Markets Have Established Success

Historically, there have been numerous successful predictions markets linked to financial assets, with notable offerings previously presented by both Kalshi and Polymarket before they began incorporating sports.

Interactive Brokers, another well-regarded brokerage among active traders, provides valuable expertise in finance-oriented event contracts. In 2024, they introduced their ForecastEx platform, enabling bets on various economic data indicators like consumer sentiment, inflation, and significant employment reports.

As the CME and FanDuel alliance continues to push predictions markets deeper into the sports realm, other gaming enterprises may feel the pressure to follow suit. Recently, there have been whispers of potential acquisitions by companies eager to establish a foothold in the yes/no event contracts space.