Less than a year after sending a letter to the Commodity Futures Trading Commission (CFTC) requesting authorization to provide sports event contracts to avoid “irreparable harm,” Sporttrade is registering with the agency as a supplier of the offerings.
Documents filed with the CFTC show that Sporttrade has applied for registration as a designated contract market (DCM). The sports betting exchange and trading platform has been providing contract trading in markets where it holds a gaming license, including Arizona, Colorado, Iowa, New Jersey and Virginia, but CFTC approval would potentially allow it to supply event contracts in the competitive prediction market space nationwide.
“Today marks the opening of an incredibly exciting chapter of the Sporttrade journey,” said Sporttrade CEO Alex Kane. “The CFTC’s market-based regulatory framework enables Sporttrade to provide market participants an elevated level of efficiency, transparency and consumer protection relative to what we’ve been able to offer to date.”
Sporttrade wants clearance for clearinghouse
In addition to DCM registration, Sporttrade has filed an application to register with the CFTC as a derivatives clearing organization (DCO). CFTC registration as a DCM and DCO would allow Sporttrade to provide a single platform for event contract trading. Companies that have similar CFTC approvals include leading prediction marketplaces Kalshi and Crypto.com.
“Federal registration will thus allow us to finally unlock the full potential of our natively-built exchange, clearing and broker technology in our pursuit to always put the customer first,” added Kane.
The CFTC has no timeline for registration approvals, with the registration process typically taking at least 180 days and, in some cases, years. The company will be subject to background checks and ongoing supervision if approved for registration with the CFTC.
Application follows Sporttrade’s letter to CFTC
Last April, Sporttrade sent a letter to the CFTC asking for permission to offer event contracts in markets outside where it holds a gaming license. The Philadelphia-based company made a request to the CFTC to offer event contracts without federal registration.
Sporttrade made the request to immediately compete in the U.S. prediction market space, as companies like Kalshi and Crypto.com dominated market share for trading.
Novig applies for CFTC registration
Sporttrade joins Novig as a gaming company pursuing CFTC registration.
Last month, Novig took the initial step to operate as an exchange operator by applying to the CFTC under the name Ludlow Exchange LLC. Novig registered as a DCM after undergoing several major operational changes over the last several years.
It operated as a betting exchange in New Jersey and Colorado before shifting to a sweepstakes gaming model which allowed it to expand its reach to 42 states and Washington, D.C. by offering free-to-play prediction gaming using a dual-currency system of payment. Now, as sweepstakes face pushback amid recent bans being signed into law in several states, it is looking to pivot again.
How other US gaming operators approach event contracts
Prediction market platforms are also facilitating event contract trading as futures commission merchants (FCMs), which can host event contract trading but do not make the markets like DCMs do.
FCMs operating in the U.S. include Underdog, FanDuel Predicts and PrizePicks. Meanwhile, some prediction market platforms, including DraftKings, are CFTC-approved to operate as introducing brokers, allowing the companies to accept orders but not handle customer funds.
