Sporttrade Files for DCM Status Under CFTC to ‘Put the Consumer First’
Sporttrade, the Camden, New Jersey-based sports activities buying and selling change, has formally utilized for Designated Contract Market (DCM) standing with the Commodity Futures Trading Commission, a transfer that would place it as the first firm ever to maintain each state gaming licenses and federal change registration concurrently.
Sporttrade’s CFTC submitting has a date of January 27 and consists of purposes for each DCM and Derivatives Clearing Organization (DCO) standing. The submitting caps a tumultuous yr for founder and CEO Alex Kane, who has been amongst the trade’s most vocal critics of the fragmented U.S. sports activities betting regulatory panorama.
“Today marks the opening of an extremely thrilling chapter of the Sporttrade journey, one which facilitates a return to our unique imaginative and prescient,” Kane mentioned in a press release in the Feb. 4 press release about the submitting, which was first reported by Sportico.
Asked what the submitting means for the way forward for Sporttrade, Kane informed DeFi Rate: “Pursuing federal registration as a DCO and DCM permits us to put the shopper first in methods we’ve got not but been in a position to do: onboard extra market makers, allow people to commerce by way of an API, and most critically, help brokers with our already-established expertise platform. All of those components contribute to lowering spreads and reducing prices. None of this stuff have been realistically permissible beneath state regulation.”
A $50 greenback wager on the flawed regulatory horse?
Sporttrade’s journey to this filing represents certainly one of the prediction market trade’s most instructive cautionary tales about regulatory timing and technique.
Founded in 2018 by Kane, a former retail dealer turned fintech entrepreneur, Sporttrade was constructed from the floor up as a monetary change for sports activities outcomes. The firm raised capital from outstanding digital market makers together with Jump Capital, Nasdaq, DL Trading, Chicago Trading Company, and Tower Research. It constructed its matching engine utilizing structure comparable to the Island ECN that powered registered U.S. fairness exchanges, and have become the first regulated sports activities betting platform to combine Nasdaq’s market surveillance expertise.
But in 2020, going through a CFTC that had simply blocked ErisX‘s try to self-certify NFL contracts, Kane made what he now acknowledges was a fateful determination: pursue state gaming licenses quite than federal registration.
“We decided that, at the time, the occasion contracts we might listing concerned gaming and as such, we would want to be regulated as a sports activities betting operator,” Kane wrote in an April 2025 letter to the CFTC. “We didn’t see every other approach of bringing our product to market, and this was confirmed by each state gaming regulator that we spoke with.”
Kane informed the CFTC the firm has invested upwards of $50 million navigating state-by-state licensing necessities, in the end launching in simply 5 states: New Jersey, Colorado, Iowa, Arizona, and Virginia.
So, what’s going to Sporttrade do with its state licenses upon receiving DCM approval?
“We haven’t but decided with regards to state licenses that we’re sharing publicly,” Kane informed DeFi Rate. “What I can say is that we’ve got spent tens of thousands and thousands of {dollars}, and years of time to create private relationships with state regulators. While we’ve got been disillusioned to not have been but in a position to provide all the options of our platform as we initially envisioned beneath the state mannequin, we all know that the prescriptive guidelines are set by state legislatures, not regulators.”
The federal floodgates open
When Kalshi received its landmark authorized battle towards the CFTC in September 2024 over political occasion contracts, it set in movement a series of occasions that might basically reshape the aggressive panorama. Under the Trump administration, the CFTC adopted a much more permissive stance towards occasion contracts, with Crypto.com self-certifying sports activities contracts in December 2024 and Kalshi following in January 2025.
Suddenly, Sporttrade’s opponents have been providing successfully an identical merchandise — exchange-traded sports activities contracts — in all 50 states, whereas Kane’s platform remained geographically constrained by its state licenses.
“It’s actually harm the enterprise,” Kane told Sportico in a latest interview. “We’re coming into the boxing ring with one hand tied behind our again.”
The aggressive disparity extends past mere geography. Under state gaming rules, Sporttrade can’t make the most of third-party brokers to develop its person attain. This represents a a important limitation when not less than half of Kalshi’s quantity now flows by way of brokerage apps like Robinhood and Webull.
“We’re sort of caught in the sluggish lane,” Kane mentioned. “That’s pinned our enterprise down from a traction and income perspective, to the level the place the CFTC factor is the highest precedence for the firm so as for it to develop.”
With CFTC approval as a DCM, Sporttrade can be in a position to associate with brokerages.
Kane’s year-long marketing campaign
The DCM submitting represents the end result of practically a yr of public advocacy by Kane, who has turn into one thing of an trade gadfly — concurrently defending the change mannequin whereas criticizing each state gaming frameworks and the firms exploiting federal loopholes.
In March 2025, Kane revealed an open letter to U.S. sports activities betting regulators and legislators talking candidly about the trade’s structural issues.
“I’ve merely misplaced depend of the variety of conversations I’ve had with gamers the place they’ve in contrast Sporttrade to different ‘books’ similar to Bovada, Pinnacle, Polymarket, Fliff, PrizePicks, ProphetX, Novig, Kalshi,” Kane wrote. “To the participant, there are not any ‘unregulated choices’ versus ‘regulated choices’. There are merely ‘choices.’”
Kane has additionally been notably sincere about the nature of his product in ways in which distinguish Sporttrade from opponents. While Kalshi has persistently characterised its sports activities contracts as monetary devices distinct from playing, Kane has taken a unique tact, acknowledging the similarities whereas additionally educating about vital nuances.
Kane has advocated for a “prediction market license class” inside state sports activities betting rules “that permits innovators to deliver income into their market,” however to no avail.
In April 2025, Sporttrade formally approached the CFTC requesting no-action reduction that might have allowed it to function beneath federal oversight with out finishing the full utility course of. That request was by no means granted, forcing the firm to take its place in line alongside not less than eight different pending DCM candidates.
So much has occurred between April and now. Considering the time between Sporttrade’s April letter requesting no-action reduction and truly submitting for DCM standing, we requested Kane about any strategic concerns in the utility timing like adjustments in CFTC management.
“The management transition is an element,” Kane mentioned. “But we additionally needed to submit all purposes, not simply for a disintermediated DCM (best submitting), however for a disintermediated and intermediated DCM, and DCO (a lot tougher).”
The path ahead
Sporttrade’s utility enters a CFTC that has signaled sturdy help for prediction market innovation. New Chairman Michael Selig, who took workplace in December 2025, has directed workers to withdraw the 2024 rule proposal that might have prohibited political and sports-related occasion contracts, and to start drafting new occasion contracts rulemaking.
“It is time for clear guidelines and a transparent understanding that the CFTC helps lawful innovation in these markets,” Selig mentioned in a recent speech outlining the company’s 2026 priorities.
The timing could lastly be working in Sporttrade’s favor. The firm submitted its change utility in December 2025 earlier than turning to its clearinghouse utility, and has met with CFTC officers a number of occasions, together with in-person classes at the company’s Washington headquarters.
That mentioned, the typical DCM approval course of takes 12-18 months, although it could be rushing up with the shifting CFTC priorities. Kane informed DeFi Rate they anticipate approval “earlier than soccer season.”
Industry implications
Sporttrade’s submitting could sign a broader shift in how established gaming firms method the prediction market alternative. The potential for twin federal-state licensing additionally raises novel questions on regulatory coordination. If accredited, Sporttrade would keep its present state gaming licenses whereas working beneath CFTC oversight — a construction no different firm has tried.
For Kane, who constructed a monetary expertise firm solely to spend years adapting it to gaming rules, the DCM submitting represents one thing of a homecoming.
“We had initially constructed our venue beneath the assumption that the sports activities buying and selling vertical would observe the trajectory of most different digital markets, one in the direction of effectivity and transparency powered by dealer intermediation and institutional participation,” Kane mentioned in the press launch. “Federal registration will thus enable us to lastly unlock the full potential of our natively-built change, clearing, and dealer expertise in our pursuit to all the time put the buyer first.”
If timeline expectations play out, Sporttrade might be serving sports activities merchants in all 50 states for the 2026 NFL and faculty soccer seasons.
The submit Sporttrade Files for DCM Status Under CFTC to ‘Put the Consumer First’ appeared first on DeFi Rate.
