The convergence between financial markets and prediction markets is advancing with a deal between derivatives exchange CME Group, and online gaming company FanDuel, to offer event contracts on certain financial benchmarks and economic data readings.
The firms said that FanDuel will launch a new stand-alone app in December that enables trading on metrics such as the S&P 500 and Nasdaq-100 indexes; certain commodity prices (including oil, gas and gold prices); cryptocurrencies; and key economic indicators, such as GDP and inflation numbers. It will also enable trading in event contracts across the four major sports (baseball, basketball, football and hockey) in states that don’t allow sports betting.
“Our new event contracts on benchmarks, economic indicators and now sports will appeal to a new generation of potential participants who are not active in these markets today,” said Terry Duffy, chairman and CEO of CME Group, in a release.
Users will be required to undergo a KYC process when signing up to trade in the app. Once approved, they will be able to trade contracts ranging from 1¢ to 99¢, the firms noted.
The deal comes in the wake of an announcement last month that CME rival Intercontinental Exchange, Inc. (ICE), was making a strategic investment in another prediction market provider, Polymarket, at a US$8 billion valuation.
As part of that deal, ICE was to become a global distributor of Polymarket’s event data, providing investors with “sentiment indicators” on a variety of market topics.