By Nick Devor

Sportsbooks like DraftKings have seen their shares crushed over the past year by prediction markets, which offer futures contracts that closely resemble sports bets. Now prediction markets are expanding beyond those contracts, putting a new industry under pressure: financial exchanges.

Last week, prediction markets' federal regulator, the Commodity Futures Trading Commission, approved perpetual futures tied to the price of Bitcoin. Unlike a typical event contract on a prediction market, perpetuals don't have an expiration date, and traders can apply leverage to their positions.

Perpetuals are a new financial product for the U.S., but they didn't debut on longstanding financial exchanges like the Chicago Mercantile Exchange -- they are tradable only on Kalshi, the prediction market platform.

Since the approval last Friday, CME stock is down roughly 11% and shares of Cboe Global Markets are down about 20% as of early trading on Tuesday.

"The approval likely creates more competition in the retail market, and is likely to curtail multiples on selected exchanges," TD Cowen analysts wrote in a Tuesday research note. "We expect P/E multiples to remain under pressure as investors work through key risk and shifting market structure."

While most of the trading activity on Kalshi is still tied to sporting events, the launch of perpetual futures there signals an ambition beyond the event contracts that have buoyed Kalshi to a $22 billion private valuation.

"What we want Kalshi to be is this kind of general purpose exchange," the firm's co-founder and chief operating officer Luana Lopes Lara said in a recent podcast interview, adding that their goal is to become the largest derivative exchange in the world. "We are about expanding what people can trade on and allowing them to trade in the future in the best way possible."

Kalshi has already filed with the CFTC to certify perpetual futures tied to cryptocurrencies beyond Bitcoin.

Perpetual crypto futures are a trillion dollar asset class on offshore markets, but have previously been inaccessible to U.S. customers. "The Commission's long-standing, principled oversight of the commodity derivatives market will now include a workable framework for true crypto asset perpetual contracts," CFTC Chairman Mike Selig wrote in an op-ed last week. "This is a framework that can limit excessive leverage, volatility and systemic risk, rather than pushing those risks offshore to unregulated venues."

TD Cowen analysts noted that interest in perpetuals will likely be concentrated among retail investors, and that institutional adoption of the products may be limited. The analysts wrote: "In speaking with management teams, we think the utility is less around the perpetual nature of the vehicles and more about the leverage."

While leverage can lead to exponential gains, critics warn it can also magnify losses.

"At this point, it is clear that the CFTC works not in the public interest or for the protection of investors but for the very industries it is supposed to regulate," said Benjamin Schiffrin, director of securities policy for Better Markets, a consumer-focused advocacy group. "Without expiration dates to impose discipline, perpetual futures facilitate continuous speculation and potentially overtrading, rapid losses and financial harm."

Write to Nick Devor at nicholas.devor@barrons.com

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June 02, 2026 12:55 ET (16:55 GMT)

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