The investment firm is reportedly working with Cboe Global Markets (CBOE) on the development of all-or-nothing options contracts that will allow people to place “yes” or “no” wagers on the performance of the benchmark S&P 500 index.
Media reports say Schwab is creating binary options that pay a cash settlement or nothing at all depending on the outcome of a specific contract. The brokerage is, in effect, developing its own prediction market similar to those offered by Kalshi and Polymarket.
Legality of Prediction Markets
Prediction markets enable investors to bet on the outcome of real-world events such as elections, sporting contests, and even the weather. Platforms such as Kalshi and Polymarket have surged in popularity since the 2024 U.S. presidential election that returned Donald Trump to the White House.
Several of Charles Schwab’s competitors, such as Robinhood (HOOD) and Interactive Brokers (IBKR), have already launched their own prediction markets. However, the legality of prediction markets is being debated. Several U.S. states are suing Kalshi and Polymarket, claiming they operate illegal gambling operations.
