(Bloomberg) \u2014 Jeff Sprecher runs a $90 billion company that owns the New York Stock Exchange, sets global benchmarks for oil and interest rates, and traded record volumes last year.<\/p>\n
Yet at one of the financial industry\u2019s biggest gatherings in Florida this week, the chief executive officer of Intercontinental Exchange Inc. knew who the crowds wanted to see.<\/p>\n
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\u201cThere are two people here everyone is talking to: Shayne and Tarek,\u201d Sprecher said in an interview, referring to Shayne Coplan, the founder of the prediction market known as Polymarket (POLA.PVT), and his rival, Tarek Mansour, the co-founder of Kalshi Inc. (KLSH.PVT)<\/p>\n
(Disclosure: Yahoo Finance has a partnership with Polymarket.)<\/em><\/p>\n The two young founders lead the nascent industry that has both captivated and unnerved Wall Street by offering financial contracts that make it possible to bet on everything from the Super Bowl to geopolitical flashpoints like Iran.<\/p>\n The founders hosted late night parties for guests at the Futures Industry Association\u2019s annual conference at the historic Boca Raton hotel, and they appeared at packed day-time events where they laid out their big ambitions. Behind closed doors they met with regulators and potential investors.<\/p>\n The rest of the industry followed their lead. Outside the conference halls, CME Group Inc. set up a branded basketball court, promoting a new prediction market app it built with gambling company FanDuel. Chicago Bulls legend Scottie Pippen was on hand to take photos and shoot around with sweaty, formally attired executives, with conference-goers betting on the winner in a live simulation of the app\u2019s yes or no bets.<\/p>\n The four-day gathering illustrated Wall Street\u2019s deepening entanglement with prediction markets \u2014 an industry it simultaneously wants to profit from, regulate and co-opt \u2014 even as questions mount about insider trading and the legality of contracts tied to geopolitical conflicts.<\/p>\n Event contracts, as the basic product is known, have been promoted as a new asset class that will allow Americans to use financial exchanges to speculate on just about anything. But the CEOs of two of the largest traditional derivatives exchanges, CME and Cboe Global Markets Inc., said during the conference that they want regulators to review the rules that have allowed prediction markets to expand so quickly into untested areas by issuing new contracts without explicit regulatory approval.<\/p>\n<\/p><\/div>\n \u201cHow do these things continue to grow if we don\u2019t have clarity of what the regulation is going to be?\u201d the CEO of CME, Terry Duffy, said in an interview.<\/p>\n Sports betting has been the most popular prediction market offering over the past year. The new exchanges make it possible to bet on football and basketball even in states where sports gambling is illegal. To be sure, several states have argued in court that prediction markets are operating unlicensed gambling operations. And some financial firms, including the Cboe, have avoided sports.<\/p>\n Cboe CEO Craig Donohue said in an interview that the company had spent 40 years arguing for the \u201clegitimate investment purposes\u201d of the derivatives they offer.<\/p>\n \u201cThere\u2019s a lot that\u2019s good within the events-contract space, and then there\u2019s a lot of stuff that falls outside of what I would consider to be legitimate investing, portfolio optimization or hedging and risk transfer,\u201d he said, \u201cI think that\u2019s concerning.\u201d<\/p>\n But Michael Selig, the new chair of the Commodity Futures Trading Commission, has gone to court to defend the right of prediction markets exchanges to list sports contracts. He gave a talk on the first day of the FIA conference where he reiterated his belief in the importance of the new industry.<\/p>\n \u201cWhen participants express views on future events and back those views with capital, they create accountability, transference and information,\u201d Selig said in his speech. \u201cThese markets, when properly regulated, are as valuable as any stock or commodity price.\u201d<\/p>\n Selig was appointed by a president who has a number of links to the industry. Donald Trump Jr. is an adviser to both Kalshi and Polymarket, and Trump Media & Technology Group is creating its own prediction market product in partnership with Crypto.com.<\/p>\n Some of the companies at the conference are looking to build on the success that Kalshi and Robinhood have had in marketing prediction markets to the retail traders who cut their teeth on meme stocks and crypto.<\/p>\n \u201cThere is so much volume on the retail side: everyone is focused on that \u2014 how do you capture a piece of that pie,\u201d said Jonathan Kellner, CEO of MEMX, an exchange backed by the likes of Citadel Securities, Goldman Sachs Inc. and BlackRock.<\/p>\n In Florida, though, there was constant talk about the various efforts to bring more sophisticated players into the markets. Executives from the brokerage firms Clear Street and Marex Group Plc both said in interviews that they are building the plumbing so that they can begin offering hedge funds and other sophisticated clients access to Kalshi in the coming months.<\/p>\n This is a remarkable shift from just a year ago, when prediction markets were still seen as a fringe phenomenon. The FIA conference of 2025 was dominated by talk of crypto, which was all the rage in the first months of the Trump administration.<\/p>\n This time around, it was the prediction market founders that everyone wanted to hear from.<\/p>\n Polymarket\u2019s Coplan showed up to his fireside chat around half an hour late, dressed in all black, keeping a room full of futures executives in business suits waiting. He was interviewed by an executive from Sprecher\u2019s company, ICE, which has committed to investing as much as $2 billion in Polymarket.<\/p>\n It was a moment that crystallized how a pair of twenty-something tech-savvy founders who built a new industry from scratch have become the center of gravity at a gathering long dominated by Wall Street\u2019s largest exchanges \u2014 propelled by shifting political winds, loosening regulation and surging trading volumes.<\/p>\n Coplan also hosted a glitzy party with pool tables, a DJ playing vinyl records picked out by attendees, and a mock TV news set, hinting at the industry\u2019s oft-mentioned ambition to replace the media as a source of reliable information.<\/p>\n Kalshi\u2019s Mansour, meanwhile, worked the crowd at the Palm Court Bar, not far from where Duffy, the CME CEO, held court with his investors.<\/p>\n Mansour and Duffy appeared on a panel together on Tuesday, where Mansour shot back at some in the financial industry who have derided prediction markets as nothing more than gambling.<\/p>\n In both financial markets and prediction markets, \u201cyou\u2019re putting some money to make more money on something you don\u2019t control,\u201d Mansour said. \u201cThat is the definition of gambling in something like 20 states. Everyone sitting on this panel has gambling products under that definition.\u201d<\/p>\n In response, Duffy took issue with some prediction market products, including certain bets on small elections, that he said should be \u201cdeemed readily manipulable and against the law.\u201d<\/p>\n But he also pointed to the plunging share prices of the big gambling companies as a sign of Kalshi\u2019s meteoric ascent.<\/p>\n \u201cThey have definitely suffered at the success of Kalshi,\u201d he said. \u201cI don\u2019t believe Kalshi is going away.\u201d<\/p>\n \u2014With assistance from Lydia Beyoud and Emily Nicolle.<\/p>\n Most Read from Bloomberg Businessweek<\/p>\n \u00a92026 Bloomberg L.P.<\/p>\n<\/p><\/div>\n<\/div>\n<\/div>\n<\/figure>\n
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