RPT-BREAKINGVIEWS-NYSE owner’s Polymarket deal catches retail FOMO

By Pranav Kiran

TORONTO, Oct 7 (Reuters Breakingviews) - Reddit-addled retail traders aren’t the only ones vulnerable to the fear of missing out. NYSE owner Intercontinental Exchange ICE.N will invest as much as $2 billion in Polymarket, a trading venue that lets the frothiest of speculators effectively bet on sports events, elections and more. As Robinhood Markets HOOD.O showed, these amateur investors are now a powerful driving force. Add in regulatory leeway, and it makes sense for bourse operators to take a punt.

Events contracts, as Polymarket or Sequoia-backed Kalshi style their offerings, are structured as two-sided markets, with participants dumping money into either a “yes” or “no” outcome. For instance: will Zohran Mamdani win the next New York City mayoral election? Will the Seattle Mariners beat the Detroit Tigers?

These venues’ popularity soared during the 2024 U.S. presidential election, when over $3 billion was wagered on Polymarket. The platform saw more than $9 billion in trading volume throughout that year. This is minuscule compared to the volume of stocks and options traded in a single day. Yet it is growing rapidly.

ICE’s investment and data-distribution deal with Polymarket, announced on Tuesday, gives it a way to gain exposure to this booming retail speculation. Aside from day-traders’ growing influence in markets, they can prove extremely lucrative.

Just look at Robinhood. The commission-free stock-trading app is expected to end the financial year with 13.4 million monthly active users, according to Visible Alpha. That’s up only 17% over the last three years, yet the company now makes twice as much revenue per trade on average. Its $128 billion market value eclipses older rival Interactive Brokers and approaches Charles Schwab.

Robinhood is already diving into predictions. In March, it partnered with Kalshi to make contracts available to its users, sending its stock up over 9%. Sports alone may lift 2026 revenue by up to $100 million, Morgan Stanley analysts reckon.

Aside from the lucre, getting close to Polymarket also helps ICE keep tabs on an area where regulation is still evolving. Predictions venues have already slipped beyond the grasp of state-based regulation of sports betting. Granted, both the NYSE owner’s deal and derivatives marketplace giant CME’s partnership with FanDuel focus on finance-related events, not football. There’s no telling, though, how far these contracts could go in mimicking more useful derivatives.

After all, U.S. regulators seem amenable. In May, the U.S. Commodity Futures Trading Commission dropped an appeal against allowing Kalshi to list election-related contracts. The Justice Department ended a probe into Polymarket in July, Bloomberg reported. The order of the day is looser regulation for the digital assets industry. It’s little wonder that Wall Street is starting to share the FOMO.

CONTEXT NEWS

Intercontinental Exchange said on October 7 that it will invest as much as $2 billion in Polymarket.

The transaction values Polymarket, which allows users to profit from predicting outcomes across topics ranging from sports and entertainment to politics and the economy, at around $8 billion pre-investment.