Bloomberg: CME Group to Launch Sports Event Contracts
The CME Group Inc., a major Chicago-based derivatives exchange, plans to debut financial contracts tied to sports games and economic indices by the end of the year, according to a report from Bloomberg. This would position CME in direct competition with burgeoning prediction market platforms like Kalshi and Polymarket.
While the CME Group has filed documents with the CFTC to launch products related to equity indices and cryptocurrency prices, these official filings do not currently include the sports contracts.
However, the move is consistent with previous statements by CME CEO Terry Duffy, who indicated in an August interview with Bloomberg that the exchange was “operationally ready” to list sports products if its partner, FanDuel, wished to proceed.
A Partnership Under Scrutiny
CME plans to distribute the new contracts to the public through futures commission merchants, including a firm it is co-developing with FanDuel, a part of Flutter Entertainment. This distribution strategy may also target other similar platforms, opening up products to retail investment brokerages.
The partnership with FanDuel, which was announced earlier this year for contracts related to economic indicators, raises potential regulatory complications for the betting giant.
Several state gaming regulators have warned that they will not permit licensed gambling operators to offer federally regulated event contracts.
A FanDuel spokesperson acknowledged the complexities, stating the company is in active discussions with various stakeholders, including state regulators. FanDuel has not yet committed to offering the sports-related contracts due to the changing legal and regulatory landscape.
Regulatory Fast Track vs. State Resistance
The CME Group’s contracts are expected to launch quickly. The firm’s license as a Designated Contract Market (DCM) from the Commodity Futures Trading Commission (CFTC) allows it to self-certify its own contracts without needing explicit regulatory approval.
However, state regulators have adopted a strongly adversarial stance against licensed operators engaging with prediction markets.
- States like Nevada and Ohio have already issued warnings that involvement in event contracts could jeopardize an operator’s state license.
- Regulators argue that event contracts are simply unlicensed wagers that threaten consumer protection safeguards, such as minimum betting ages and responsible gaming requirements, which are mandated at the state level.
- Several state regulators have also warned that any business relationship with a firm offering these contracts, which they consider illegal sports gambling, would call into question the “continued suitability” of the licensed operator.
If the CME Group proceeds with the sports-related contracts, it will accelerate the existing conflict between the CFTC’s federal jurisdiction over derivatives and the states’ authority to regulate gambling.
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