ProphetX Seeks CFTC Approval to Become First Sports-Focused Prediction Exchange
ProphetX, a sports activities prediction platform at the moment working beneath a sweepstakes mannequin, has filed functions with the U.S. Commodity Futures Trading Commission (CFTC) to register as each a Designated Contract Market (DCM) and a Derivatives Clearing Organization (DCO).
If permitted, ProphetX would turn into the primary federally regulated alternate devoted particularly to sports-based occasion contracts.
The firm introduced the submitting on Tuesday, calling it a significant step towards providing real-money buying and selling on sports activities outcomes nationwide beneath federal oversight.
“Our purpose has at all times been to construct a clear, compliant and modern market that treats sports activities outcomes with the identical integrity and construction as every other asset class,” stated Dean Sisun, CEO and Co-Founder of ProphetX. “Filing for DCM and DCO standing is the following logical step in legitimizing the way forward for user-driven sports activities buying and selling.”
Why the Shift Now?
ProphetX’s transfer comes amid tightening regulatory stress on sweepstakes wagering fashions. Several states, together with California, have taken action against sweepstakes-style gaming apps, whereas platforms have confronted promoting restrictions and market withdrawals.
At the identical time, prediction markets have gained severe traction within the U.S. Kalshi and Polymarket have gone by way of a number of massive funding rounds and seen speedy development in buying and selling quantity throughout classes starting from elections to sports activities to macroeconomic outcomes. Major gaming operators, together with DraftKings, FanDuel, and Underdog, are actually exploring federally regulated event-contract merchandise of their very own.
By in search of DCM and DCO standing, ProphetX goals to shift from state-by-state gaming oversight to a single federal regulatory framework. This construction has drawn growing curiosity from operators in search of a scalable compliance path.
A Sports-First Positioning
This distinction is important.
Unlike platforms that began with politics or monetary occasions and later added sports activities, ProphetX’s product has been sports-driven since launch. The firm operated as a licensed sports activities betting alternate in New Jersey earlier than transitioning to a sweepstakes mannequin to attain extra markets.
If permitted, ProphetX would permit customers to commerce straight on outcomes of video games and efficiency metrics, with contracts priced by way of market-driven provide and demand relatively than conventional sportsbook odds.
Co-founder Jake Benzaquen referred to as it “adapting sports activities to the CFTC framework,” relatively than adapting the CFTC to sports activities. That may sound like a small semantic distinction, but it surely displays a strategic benefit: sports activities bettors are already prediction market members, they only don’t use the vocabulary but.
ProphetX is attempting to construct an interface that makes the transition really feel native.
What Comes Next?
CFTC approvals for brand new exchanges are sometimes prolonged, and the company has been working with restricted staffing due to the continuing federal authorities shutdown. ProphetX doesn’t count on a remaining dedication till 2026.
In the interim, the corporate will proceed working beneath its present sweepstakes mannequin.
If permitted, ProphetX would be part of Kalshi, Polymarket (returning U.S. operations), and Crypto.com’s alternate as platforms allowed to supply occasion contracts nationwide. It can be the primary amongst them constructed solely for sports activities.
Essentially, ProphetX is betting that the way forward for sports activities buying and selling appears extra just like the CME Group than Caesars. If they’re proper, the sports activities betting business will look very completely different in 5 years.
In the meantime, everybody else within the prediction markets business shall be watching the CFTC docket very intently.
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