NEW YORK — Intercontinental Exchange and CME Group are betting that prediction markets can become Wall Street’s next retail trading product, backing crypto-native Polymarket and putting event contracts inside a new FanDuel app. The push comes as Kalshi’s latest financing round pegged the company at $11 billion and as federal regulators move toward a clearer rulebook, Feb. 2, 2026.
Prediction markets let traders buy and sell contracts that pay out based on a real-world outcome, turning everything from a Federal Reserve decision to a game result into a price. Supporters say the markets can surface information quickly; skeptics say they can blur into gambling, invite manipulation and amplify rumor as “probabilities” spread across social media.
How prediction markets are breaking into mainstream finance
The boldest Wall Street endorsement so far came from the owner of the New York Stock Exchange. Intercontinental Exchange said it would invest up to $2 billion in Polymarket at an approximately $8 billion pre-investment valuation and distribute the platform’s event-driven data to institutional clients, according to ICE’s announcement of a strategic investment in Polymarket. ICE Chair and CEO Jeffrey Sprecher said, “There are opportunities across markets which ICE together with Polymarket can uniquely serve.”
CME is taking a different approach: meet retail users where they already are. FanDuel and CME said they launched FanDuel Predicts in five states in December, allowing customers to trade contracts priced from $0.01 to $0.99 and covering financial benchmarks, economic indicators and select sports categories, according to CME Group’s launch details for FanDuel Predicts. “CME Group prediction markets will enable a new generation of users to express their views on global benchmarks, economic indicators, sports and more,” CME President and CFO Lynne Fitzpatrick said.
Kalshi, which is regulated at the federal level, has emerged as the sector’s valuation marker. The company raised $1 billion at an $11 billion valuation, Reuters reported, as more brokers and media brands experiment with “event contract” hubs alongside traditional trading.
Regulators redraw the line for prediction markets
The biggest open question is who gets to set the guardrails: derivatives regulators, gaming regulators, or both. The Commodity Futures Trading Commission said it will draft new regulations for event contracts and withdraw a prior proposal that would have barred many of them, Reuters reported. The same report described rising friction with state officials and critics who argue the contracts are gambling in a new wrapper.
The tug-of-war has been building for years. In 2020, the CFTC granted KalshiEX status as a designated contract market, a key step that gave Kalshi a regulated path to list event-based contracts. Polymarket’s earlier U.S. run was bumpier: the CFTC ordered it to pay a $1.4 million penalty in 2022 for offering off-exchange, event-based binary options, warning that “all derivatives markets must operate within the bounds of the law.”
Even with bigger partners and tighter identity checks, the reputational risk remains. An Axios analysis said prediction markets can accelerate misinformation when viral claims become tradable contracts and prices get misread as verified facts, citing concerns around Polymarket and Kalshi’s role in fast-moving narratives, according to Axios’ report on prediction markets and “fake news”.
For now, prediction markets are gaining legitimacy faster than the industry’s critics expected. Whether they become a durable slice of Wall Street — or a short-lived crossover between trading and betting — may depend on how quickly regulators, exchanges and platforms can agree on what, exactly, these contracts are supposed to be.
