Cboe plans to bring back binary options to compete with prediction markets

Cboe Global Markets is considering bringing back binary options contracts, also known as “all-or-nothing” options contracts, for retail investors, a move that would put the exchange in direct competition with prediction market platforms, according to The Wall Street Journal.

The Chicago-based exchange operator has opened early-stage conversations with retail brokerages and is exploring new contract offerings, such as revised binary options, in coordination with market makers to handle trade execution.

Prediction markets like Kalshi and Polymarket have gained prominence since late 2024, when Kalshi successfully challenged the CFTC’s attempt to block political event contracts. Momentum for these markets was boosted even more by the 2024 US election.

An event contract is a financial agreement where the payoff is determined by a specific event. It provides a straightforward way to bet on real-world outcomes, offering either a fixed return or nothing depending on whether the event occurs.

Like event contracts, all-or-nothing options are financial contracts in which the outcome is binary; either the holder wins a fixed amount or loses the entire investment, depending solely on whether a defined condition is satisfied at expiration.

For sportsbooks and fantasy platforms, event contracts offer a path to operate nationally under CFTC oversight rather than fragmented state gambling laws. Financial institutions and exchanges see opportunities to meet retail demand and diversify products.

Although legally permissible, these contracts face a growing patchwork of state-level challenges and cease-and-desist orders from regulators who argue they constitute unlicensed gambling rather than federally protected derivatives.