Cboe Launches Partial Payout Prediction Markets, Challenging Binary Model

Chicago, February 25, 2026 — Cboe Global Markets has unveiled a new prediction markets framework that allows partial payouts on event contracts, marking a significant departure from the binary payout structure that dominates current platforms like Polymarket and Kalshi.

The Chicago-based exchange operator's innovation enables traders to receive graduated payouts based on degrees of outcome fulfillment, rather than the traditional all-or-nothing model that characterizes most prediction markets.

Framework Details

• Partial payout structure: Contracts can pay out proportionally based on outcome magnitude
• Expanded outcome range: Moves beyond simple yes/no questions to scalar predictions
• Traditional exchange backing: Leverages Cboe's regulatory infrastructure and institutional relationships
• Market maker integration: Designed to work with existing derivatives market makers

The framework addresses a key limitation in current prediction market design, where complex events with multiple possible outcomes are forced into binary structures. For example, instead of betting whether unemployment will rise above 5%, traders could position on the exact unemployment rate with payouts scaling accordingly.

"This represents a fundamental shift in how we think about event contract design," said a Cboe spokesperson. "Rather than forcing complex real-world events into yes-or-no boxes, we're creating instruments that better reflect the nuanced nature of outcomes."

Market Context

The announcement comes as prediction markets face increasing scrutiny over controversial betting categories. Recent criticism has focused on platforms offering markets on sensitive geopolitical events, including regime change scenarios and conflict outcomes that some critics argue cross ethical boundaries.

Meanwhile, the prediction markets sector continues to show strong growth, with platforms like Polymarket processing $75.79 million in 24-hour volume according to recent data. However, regulatory uncertainty remains a challenge, particularly around political event contracts in the United States.

Cboe's entry leverages its position as a regulated derivatives exchange, potentially offering institutional participants a more familiar regulatory environment compared to decentralized platforms. The company operates under existing CFTC oversight, which could provide clearer regulatory pathways for event contracts.

Industry Implications

The partial payout model could address several efficiency issues in current prediction markets:

Information aggregation: Scalar outcomes may better capture crowd wisdom on complex events with multiple variables Liquidity provision: Market makers familiar with derivatives pricing may find partial payout structures more accessible than binary models Risk management: Graduated payouts allow for more sophisticated hedging strategies around uncertain events

Analysts note that the framework could particularly appeal to institutional participants who use prediction markets for hedging macroeconomic or policy risks, where outcomes often fall on a spectrum rather than binary categories.

The development also highlights growing competition in the prediction markets space, as traditional financial infrastructure providers seek to capture market share from crypto-native platforms that have dominated recent growth.

Risk Considerations: Event contracts carry substantial risk of total loss. Regulatory treatment of prediction markets remains uncertain, and liquidity may be limited in newly launched instruments.

Data sources: Reuters, NPR, PR Newswire, CNBC, Polymarket. Analysis as of February 25, 2026.