Cboe, Hyperliquid, Lumina Push Into Prediction Markets, But Some Forecast Bubble Will Burst
Another day, another wave of news around companies forging their own paths into prediction markets. Optimism around the future of PMs, though, is matched with a healthy dose of pessimism.
The prediction markets land grab marches on, with new reports of multiple companies making moves into the space. The massive investment in the rising asset class, though, begs the question: Will the bubble burst?
This week’s news has derivatives exchange Cboe exploring a relaunch of “yes/no” contracts; decentralized crypto exchange Hyperliquid announcing it will support “outcome trading”; and prediction markets startup Lumina Markets on the recruiting trail in preparation for launch.
Cboe Sticking to Financial Markets
Cboe is in early talks with brokerages about offering “all-or-nothing” options contracts that, like prediction markets, settle at either 0 or 100.
While the Wall Street Journal writes the move would put Cboe in direct competition with the likes of Kalshi and Polymarket, the company has no plans to get into sports. Instead, it will stay in its lane of financial markets.
This won’t be Cboe’s first go-round with such contracts. In 2008, the company launched binary call options tied to the S&P 500. That was before prediction markets exploded in popularity, and the offering fell flat.
Hyperliquid
Announcing its trading engine, HyperCore, will support prediction markets, Hyperliquid cites “extensive user demand” for such products.
He’s operating in a different sector, but Schwab CEO Rick Wurster indicated demand is not dictating that his company offer prediction markets.
“[Other innovations] are far more impactful to our clients’ ability to grow their wealth than prediction markets,” Wurster said recently. “When we go out and survey our clients about what they want from us, prediction markets is low on the list.”
Lumina Markets
Business Insider reports Lumina, a prediction markets startup with the same address as Interactive Brokers, is looking to fill roles in legal & compliance and marketing.
From the LinkedIn job postings:
“Lumina Markets prepares to launch a new prediction market platform. …
“Backed by a billionaire pioneer of electronic trading, Lumina is approaching this opportunity with a long-term mindset and institutional standards. Our mission is to make prediction markets mainstream. What others view as niche speculation, we see as a trillion-dollar opportunity to redefine everyday investments.”
That billionaire is Interactive Brokers boss Thomas Peterffy.
Applications are no longer being accepted for marketing lead, which pays $125,000-175,000 a year. The legal & compliance role, which is still open as of this writing, offers a pay range of $175,000-250,000.
Lumina was incorporated by an Interactive Brokers lawyer, and a different attorney who has worked with Interactive Brokers is listed as the CEO of the startup prediction market, according to documents uncovered by Business Insider.
Lumina is Interactive Brokers’ second attempt at launching a CFTC-regulated exchange. ForecastEx, whose contracts are traded on Interactive Brokers’ own platform plus Robinhood, sees less than 1% of the volume on Kalshi.
Billions at Stake
The glut of companies racing into prediction markets – from Kalshi and Polymarket to financial and crypto exchanges to sportsbooks and DFS providers – harkens memories of numerous industries that got too big too fast. For every flourisher during the dot-com, cryptocurrency, and sports betting booms, dozens were left in the dust.
Optimism aboundsm, of course. Citizens projects that prediction markets revenue will grow to $10 billion annually by 2030, a five-fold increase from current levels, and Kalshi and Polymarket have recently been funded to the tune of billions of dollars. Intercontinental Exchange, the owner of the New York Stock Exchange, put $2 billion into Polymarket.
The optimism is matched by a fair amount of pessimism.
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