CME Group has teamed up with FanDuel, the US online gaming operator owned by Flutter Entertainment, to bring a new range of event-driven financial products to US customers.

This marks not only Flutter’s leap into financial services at a time when ‘event contracts’ products are growing in the US, and not without controversy. The partnership will develop fully funded contracts that allow users to take simple “yes” or “no” positions starting at $1. 

Launching later this year, the products are expected to cover benchmarks such as the S&P 500 and Nasdaq-100, commodities including oil, gas, and gold, cryptocurrencies and major economic indicators such as GDP and CPI.

Terry Duffy, CME Group Chairman and CEO, stated: “Individual investors are increasingly sophisticated and continually pursuing new financial opportunities. To meet this demand, we have created this innovative partnership, which will operate a non-clearing FCM. 

“Together, our event-based products will appeal to the growing public interest in markets, and we will provide education to attract a new generation of potential traders not active in derivatives today.”

A fine line between trading and betting

Similar products already exist in the US through companies like Kalshi, Robinhood and Polymarket, the latter returning to its founding country earlier this year via an acquisition of its own.

These contracts let people take positions on outcomes ranging from elections to sports events. While promoted as financial products, event contracts have faced backlash from elements of the industry and particularly from regulators, with some arguing that they share many similarities with traditional betting.

The Commodities Futures Trading Commission (CFTC) was very confrontational towards contacts under President Joe Biden, but its position seems to have softened under the Trump administration. 

A number of state regulators are still very much opposed, however, with Kalshi involved in litigation against cease-and-desist orders issued by three of them.

FanDuel seems to be approaching the market carefully, aiming to combine the excitement of these event contracts with strong consumer protections and clear regulatory compliance. 

Amy Howe, CEO of FanDuel Group, added: “Partnering with CME Group will unlock our ability to bring even more new and engaging products to FanDuel’s fast-growing customer base. 

“We believe there is potentially a wide audience for trading event-based markets and we want to provide a platform that allows our customers to engage in this activity. We are excited to be partnering with CME Group to design new and engaging products, combining innovation with best-in-class regulatory compliance and consumer protections.”

Partnership structure and goals

As part of the deal, CME Group and FanDuel will set up a joint venture to operate a non-clearing futures commission merchant (FCM). This entity will provide FanDuel customers with access to the event contracts. 

Subject to approval from the Commodity Futures Trading Commission (CFTC), the contracts will be listed on CME Group exchanges and governed by their rules, while also being accessible through participating FCMs.

Taking the leap into event contracts has actually been on the table for Flutter for some time, at least speculatively. The group has noted the potential of the space in earnings calls, for example, observing that its experience of managing the Betfair Exchange could come in handy when designing and operating a predictions platform.