Interactive Brokers Group, led by founder and chairman Thomas Peterffy, has introduced election forecast contracts, allowing customers to bet on political races. This move marks the first major U.S. financial institution to offer such a service, with immediate uptake seen as 16.9 million contracts being traded on ForecastEx LLC, the subsidiary operating the new election contracts. Traders can place wagers on presidential election outcomes, control of the U.S. Senate and House of Representatives, and individual Senate races in key battleground states.
Peterffy insists that ForecastEx is more than just a gambling business and revenue stream for his investment empire. He believes it is a way to encourage people to think more rigorously about probabilities in their everyday lives, claiming that most people make irrational decisions without evaluating probabilities. Interactive Brokers, which generated $4.34 billion in revenue last year, only charges a 1% commission on the ForecastEx contracts. Despite generating just $169,000 in revenue from the initial contracts traded, Peterffy foresees ForecastEx becoming a significant revenue generator in the long run.
The contracts offered by Interactive Brokers allow individuals to bet on political events, movements of economic indicators, and critical climate data. Unlike competitors offering bets on pop culture and miscellaneous events, Interactive Brokers focuses on “serious” topics with potential economic and social implications. Peterffy believes that by providing bets tied to official government data and reports, the platform can avoid manipulation and maintain credibility. He expects this focus to attract new traders to Interactive Brokers’ core stock brokerage business.
Peterffy faces stiff competition from platforms like Polymarket and Kalshi, which allow users to place bets on various events beyond politics. However, Interactive Brokers differentiates itself by focusing solely on serious topics and using government data for its contracts. Peterffy also believes that ForecastEx will engage new customers and increase interest in the stock brokerage business. He reveals his own voting plans, indicating that he will vote for Donald Trump due to his aversion to socialism, but clarifies that Interactive Brokers employees are not allowed to trade Forecast Contracts.
The introduction of election forecast contracts by Interactive Brokers Group marks a significant development in the financial industry. With a focus on serious topics and government data, the platform aims to encourage people to think more rigorously about probabilities in their decision-making. Despite facing competition from other prediction markets, Interactive Brokers remains confident in the long-term potential of ForecastEx and its ability to attract new traders to its core stock brokerage business. As the platform continues to grow, it will be interesting to see how customers engage with the various betting options available and what impact it may have on the broader financial industry.
