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Intercontinental Exchange makes strategic investment in Polymarket in bet on prediction markets

DraftKings and Flutter fell on the news, as prediction markets are clearly gaining traction and the risk to sports betting apps grows.

Matt Phillips

10/7/25 11:45AM

Financial market operator Intercontinental Exchange, or ICE, announced it would invest up to $2 billion in prediction markets company Polymarket amid growing signs that the prediction markets business is gaining traction.

ICE — the parent company of the New York Stock Exchange and the ICE futures markets, among others — didn’t move much on the news, perhaps because of the rather limited scope of the immediate business relationship, in which ICE will become the distributor of the data produced by Polymarket’s predictions business. ICE said the deal “is not expected to have a material impact on ICE’s 2025 financial results.”

And for now, Polymarket trading remains barred in the US, following a 2022 agreement settling Commodity Futures Trading Commission allegations that it was running what amounted to an unlicensed commodities exchange.

But Polymarket is expected to begin offering trading in the US again soon. Last month, it purchased a CFTC-licensed derivatives exchange in a likely precursor to reentry. Polymarket has also gone into business with the Trump family, as Donald Trump Jr.’s 1789 Capital fund recently made an undisclosed investment. The president’s son is also on the company’s advisory board.

But more broadly, the growth of prediction markets could be seen Tuesday in the shares of sports betting apps DraftKings and Flutter Entertainment — the parent of FanDuel — which both tumbled.

Investors have grown concerned that the sports betting business is likely to come under continued pressure from prediction markets, in part because of seemingly advantageous federal regulatory treatment of sports-related trading on prediction markets. The industry argues that prediction markets are a form of financial derivatives and not sports betting, and therefore should be federally regulated by the CFTC. That could mean prediction markets will bypass state and tribal laws and constraints on sports gambling. The question is currently in the courts.

But in the meantime, Kalshi sports markets are live in 50 states, and football-related trading at Kalshi hit another new record this weekend as a result of trading around college and NFL football, according to a note from Piper Sandler analyst Patrick Moley.

Moley notes that in September, Kalshi’s volumes totaled almost $2.9 billion, up 328% from last year, with sports predictions accounting for some 90% of all volumes.

Moley noted that that should bode well for Robinhood Markets, which has a strategic relationship with Kalshi in which Robinhood traders can access Kalshi markets. Moley estimates that activity on Robinhood accounts for 25% to 35% of all Kalshi volumes.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions. I own stock as part of my compensation.)

Max Knoblauch4h

Southwest reports lower-than-expected Q1 earnings and revenue, declines to offer full-year profit update

Southwest Airlines reported its first-quarter earnings after the bell on Wednesday. Its shares fell more than 6% in after-hours trading.

For the first quarter, Southwest reported:

Adjusted earnings of $0.45 per share, compared to the $0.47 per share expected by Wall Street analysts polled by Factset.
Revenue of $7.25 billion, compared to estimates of $7.27 billion.

The carrier guided for adjusted earnings of between $0.35 and $0.65 per share for its second quarter, a range whose midpoint is below analyst estimates of $0.53 per share. Regarding its full-year 2026 earnings estimate of “at least” $4 per share, Southwest declined to give an update “given the ongoing macroeconomic uncertainty.”

“Achieving this outcome would require lower fuel prices and/or stronger revenue performance to offset higher fuel expense,” Southwest said.

Southwest introduced bag fees last year, ending a more than five-decade-long “bags fly free” policy. Earlier this month, less than a year after the change, it joined its major US rivals in hiking its bag fees by $10 amid surging jet fuel prices.

Southwest, which discontinued its fuel-hedging program last year, said it spent $1.36 billion on fuel and related taxes in the first quarter, up 8.6% year over year.

Matt Phillips4h

ServiceNow dives after reporting sequential decline in profit margins

Cloud software giant ServiceNow — which has been something of a poster child for the AI-related software sell-off — saw its shares fall sharply after delivering Q1 results that included a quarter-on-quarter decline in profit margins.

The company reported:

Revenue of $3.77 billion, higher than the $3.75 billion analyst consensus estimate published by FactSet.
Diluted adjusted earnings of $0.97 per share, on point with the $0.97 analysts had expected.
Subscription revenue of $3.67 billion vs. the $3.65 billion predicted.
Non-GAAP gross margins of 79.5%, down from 80.5% in Q4.

ServiceNow issued guidance for Q2 subscription revenues of between $3.815 billion and $3.820 billion, compared to the $3.75 billion FactSet consensus estimate.

ServiceNow shares have been at the epicenter of the software sell-off driven by the fear that such companies are at risk of being rendered obsolete by AI. The stock was down 33% for the year through the end of the New York trading session on Wednesday.

Matt Phillips4h

IBM falls despite posting better-than-expected Q1 results

Big Blue fell in after-hours trading despite reporting better-than-expected Q1 results, as it didn’t include in the release an internal metric it typically discloses to track the progress of its AI business. IBM reported:

Q1 revenue of $15.92 billion vs. the $15.63 billion FactSet consensus estimate.
Adjusted earnings per share of $1.91 vs. the $1.81 consensus expectation.
Sales of $7.05 billion at its key, high-margin software segment vs. a $6.98 billion consensus of nine analyst estimates.
Sales of $3.33 billion in its infrastructure unit, which houses its growing AI mainframe business, vs. a $3.13 billion consensus estimate.

Unlike recent earnings statements, the company made no mention of an internal metric it used to track its progress in AI, which it called its “generative AI book of business.” That metric stood at $12.5 billion at the end of 2025, per the company.

The infrastructure business is of acute interest to the market, after AI giant Anthropic announced in February that Claude Code could efficiently modernize code bases in the COBOL programming language, which serves as a cornerstone of IBM’s enterprise mainframe business. The language is still widely used in certain industries, such as airlines and finance. (ATMs, for instance, run almost entirely on COBOL.)

Anthropic’s COBOL announcement cut the legs out from under IBM. The stock plunged 13% on February 23, the day of the announcement — its worst daily drop in more than 25 years. And it was down roughly 15% for the year through the end of trading Wednesday.

Rani Molla

Tesla Q1 earnings and revenue beat Wall Street’s estimates

Tesla reported earnings after the bell Wednesday.