Charles Schwab Partners With Cboe to Launch Binary Options on the S&P 500, Entering the Prediction Market Space

Charles Schwab is moving into the prediction market business. The nation’s largest retail brokerage confirmed it is collaborating with Cboe Global Markets to develop binary all-or-nothing options contracts tied to the performance of the S&P 500, according to reporting from the Wall Street Journal. The product would allow Schwab clients to make yes-or-no bets on whether the index hits a specified level — the same binary contract structure that defines prediction markets.

Plans call for the contracts to be available to Schwab’s retail clients within the coming months. Cboe is providing the exchange mechanism, including a feature that would allow traders to receive a partial payout if their prediction proves largely accurate even if the index does not precisely match the target price. A person familiar with the situation confirmed to the Journal that Cboe is indeed partnering with Schwab on the product, though detailed terms were not disclosed.

A Major Mainstream Entry Into Binary Betting

Schwab’s move carries significant symbolic weight. The brokerage has more than 35 million active brokerage accounts and manages trillions in client assets. Its entry into prediction market-style products signals that the format is no longer niche — it is becoming a product category that mainstream financial institutions are willing to build and market to everyday investors.

The irony is notable. Schwab CEO Rick Wurster previously expressed concerns about sports-related prediction markets, describing them in terms that implied parallels to gambling. The company is now launching a binary options product that uses the same fundamental contract architecture. The distinction is that Schwab’s product is tied to a financial index rather than a sporting event — a distinction that matters legally but may matter less to retail investors who simply want to make a directional bet with a fixed payout structure.

How This Fits Into the Broader Prediction Market Landscape

Schwab’s entry comes at a moment when prediction markets are seeing explosive growth. The week ending June 15 produced $12.2 billion in weekly notional volume across the sector — an all-time record — with sports contracts alone accounting for $5.8 billion of that total. Platforms like Kalshi and Polymarket have driven most of that growth. DraftKings and FanDuel have both launched prediction market products as well, though both have faced regulatory challenges in states that classify their offerings as unlicensed gambling.

The prediction market sector has been locked in a multi-state jurisdictional battle between the CFTC, which claims exclusive federal authority over event contracts, and a coalition of 41 state attorneys general who argue prediction markets are functionally sportsbooks that should be regulated at the state level. Schwab’s product, being tied to a financial index rather than a sporting outcome, likely sits outside that particular regulatory conflict — but its commercial success would validate the binary contract format and potentially accelerate mainstream adoption of sports prediction products as well.

For bettors and investors curious about how binary prediction contracts compare to traditional approaches, the best prediction market apps currently offer both financial and sports-related markets, while Schwab’s pending product would focus exclusively on index performance. Understanding how prediction markets differ from sports betting matters increasingly as the two worlds continue to blur.