Charles Schwab, one of the largest brokerage firms in the United States, is preparing to enter the Prediction Market with Cboe Global Markets. They planned to introduce contracts that allow traders to make simple yes-or-no predictions on where the S&P 500 will finish.

This move from  Schwab has directly challenged the current dominance of Kalshi, Polymarket, Coinbase, and Robinhood.

Why Schwab Is Entering Prediction Markets Now

Over the last two years, prediction markets have grown from a niche product into a rapidly expanding trading category. Platforms such as Polymarket have processed billions of dollars in trading volume around elections, interest-rate decisions, inflation reports, and other major events.

Kalshi, which operates under U.S. regulatory approval, has also expanded rapidly by offering event contracts tied to economic releases and political outcomes.

At the same time, Coinbase and Robinhood have recently entered the space, signaling that demand extends well beyond crypto-native users.

Schwab appears to see an opportunity to bring prediction-style trading to its large base of traditional investors while staying focused on financial markets.

How Schwab’s Product Will Work

According to reports, Schwab’s contracts will function more like binary options than traditional prediction-market contracts.

Traders will be asked a simple question. Will the S&P 500 finish above or below a certain level?

If the prediction is correct, the contract pays a fixed amount. If not, it expires worthless.

Schwab and Cboe are also discussing another version linked to Cboe’s “Plus Zone” model. Under this structure, traders could receive a partial payout even if the final result does not exactly match their prediction.

That feature could help reduce some of the all-or-nothing risk often associated with prediction markets.

How It Differs From Kalshi and Polymarket

The product may look similar to prediction markets offered by Kalshi and Polymarket, but there is a key difference.

Polymarket allows users to bet on everything from elections to geopolitical events, and Kalshi offers contracts on a wide range of real-world outcomes. 

However, Schwab plans to focus only on financial markets with objectively measurable results.

This approach may help the company avoid some of the regulatory challenges surrounding political prediction markets. It also fits naturally with Schwab’s existing customer base, which already trades stocks, ETFs, and options.

Prediction Markets and Crypto Are Starting to Merge

Schwab’s move comes as it expands its digital asset strategy. Coinpedia news reported that the company recently launched spot Bitcoin and Ethereum trading for certain retail customers and has announced plans to add crypto trading, transfers, and custody services for financial advisors by 2027.

This creates an interesting overlap between crypto and prediction markets.

The launch is expected in the coming months, though final details have not yet been announced.

If successful, Schwab could bring millions of traditional investors into prediction-style trading and increase competition across the industry.