Interactive Brokers says betting on US midterm elections should juice growth of its platform

Prediction markets, illegal until 2024, have boomed Trump administration has loosened regulations Peterffy bullish on prediction market even as rivals proliferate By Anirban Sen NEW YORK, Jan 14 (Reuters) - As Americans bet on U.S. midterm elections in November, Interactive Brokers (IBKR.O) founder and chairman Thomas Peterffy said he expects growth to accelerate this year for the prediction markets platform his company launched in 2024. The online brokerage platform’s predictions market, ForecastEx, allows investors to buy “yes” or “no” contracts on questions ranging from economic indicators to elections to climate. Peterffy told Reuters in an interview that in 2026, Interactive Brokers will look to integrate its betting offering more closely with its other services, including new products it may launch this year. “Our customers will be better informed when they see the forecast predictions, vis-a-vis subjects that are relevant to the companies and industries that they invest in or in the industries in which they have to lighten up their investments,” said Peterffy, one of the 25 richest men in the world, according to Forbes, which pegs his net worth at about $82 billion. “Looking at the future developments in total, gives our customers an advantage over other brokers who do not have a full plate of products that customers can view,” he said. Prediction markets platforms have boomed since President Donald Trump began his latest term and his administration loosened regulations on the sector. Betting on events such as elections was illegal until 2024, when a U.S. federal court dismissed a Commodity Futures Trading Commission (CFTC) rule that prohibited betting on elections in the U.S. MIDTERM BOOST Since the regulatory rollback, prediction markets have grown at a breakneck speed. In October, Intercontinental Exchange (ICE.N) , which owns and operates the New York Stock Exchange, invested up to $2 billion in Polymarket. Kalshi, another fast-growing predictions market player, was valued at $11 billion in its latest fundraising round. Interactive Brokers has a market value of about $120 billion. It is one of the largest U.S. trading platforms with about 4.13 million customer accounts at the end of September, up 32% from a year earlier. The company expects customer accounts to grow at a similarly torrid pace in 2026, Peterffy said, as betting on the upcoming midterm elections to drive growth. He is optimistic about ForecastEx even as he expects many more rivals to enter the business. He noted that “more and more prospective participants are trying to enter this market and there doesn’t seem to be any barrier. The applications are practically limitless, in the sense that we’re full of questions about the future all the time. I’m incredibly bullish on this space, especially with elections coming this year.” Some recent wagers on platforms like Polymarket have fueled suspicions of insider trading and drawn scrutiny from U.S. lawmakers, who are pushing to prohibit federal officials and government employees from betting in prediction markets. Some U .S. states also have recently raised questions about whether sports-prediction platforms like Kalshi violate state gaming regulations. Interactive Brokers is also expanding in the cryptocurrency arena. Last year, the firm launched a stablecoin that retail investors can use to fund their brokerage accounts. The company has a partnership with crypto platform Paxos and is an investor in crypto exchange Zero Hash. Through these tie-ups, the brokerage firm offers trading in various cryptocurrencies to customers. Interactive Brokers also runs a prime brokerage unit that caters to several hedge funds. The company said its hedge fund clients witnessed returns of about 28.91% last year, outperforming the benchmark S&P 500 index (.SPX) that grew 16.4% during the same period. FED INDEPENDENCE Like everyone in the financial sector, Peterffy has been keeping an eye on the U.S. Justice Department’s threat to indict Federal Reserve Chair Jerome Powell over congressional testimony he gave last summer about a Fed building project. Other leading global central banks and several Wall Street leaders, including Jamie Dimon, have lined up in support of Powell. “I’m in favor of the independence of the Fed,” Peterffy said, adding that “if they find any wrongdoing, whether it’s the Fed chair or anybody else, that person should be prosecuted.” Peterffy cautioned against the Fed cutting interest rates quickly this year, saying that he “wouldn’t want inflation to run away.” “I would not be pushing for lower rates as fast as some folks in the administration are.”