Prediction Markets Weekly: Utah criminal court summons Kalshi founders, Sporttrade gets DCM status

Midterm elections aligning with major gaming operators’ Q3 earnings calls meant this week was a big one in the prediction markets news cycle.

Companies including DraftKings, Flutter, and Sportradar discussed their event contracts business at length, and there were several major updates from the courts, including:

• The Second Circuit denying Kalshi’s requests for temporary relief against New York and Connecticut
• Arkansas suing the same company, accusing it of offering illegal gambling
• The Commodity Futures Trading Commission (CFTC) telling registered DCMs to reverse any geoblocking they implemented

What else happened this week? As we do every Friday, we break down some of the things you might have missed in recent days in ‘Prediction Markets Weekly’.

Court summons Kalshi’s Mansour, Lara to answer criminal charges

Kalshi’s co-founders, CEO Tarek Mansour and COO Luana Lopes Lara, will respond to Utah’s 14 criminal charges in state court next month.

Utah Attorney General Derek Brown filed 13 felony charges and one misdemeanor count against the company in late October in a court filing that named Mansour and Lara as co-defendants. They will appear in Salt Lake City court on Dec. 4 for an initial arraignment.

Utah’s tangled litigation web

• Utah instigated a separate civil enforcement case against Kalshi, as well as two Susquehanna trading firms, earlier in October, after a federal court denied the firm a preliminary injunction against state officials.
• The CFTC subsequently petitioned for an injunction against Utah on Oct. 26.
• Utah filed the criminal charges Oct. 28, after launching an investigation that found that residents could open accounts and trade on sports prediction markets in the state, the constitution of which explicitly prohibits all forms of real-money gambling.

Sporttrade intends to lead sports contracts field after DCM approval

The CFTC approved Sporttrade to operate as a federally regulated sports prediction markets exchange, completing the former peer-to-peer betting exchange’s operational pivot.

Sporttrade was already approved as a derivatives clearing organization (DCO) in mid-October and is now registered as a designated contract market (DCM). The dual status allows it to list, process, and clear event contracts and more on its own platform, clear other DCMs’ trades, as well as work with futures commission merchants (FCMs), introducing brokers (IBs), and other companies in the prediction markets infrastructure.

Focused on sports event contracts, Sporttrade said it is already actively onboarding brokers “with national distribution” such as Fliff. That is part of a “pipeline” of partners it is targeting to quickly expand its market presence in the coming months.

Sporttrade leans on betting exchange roots

While it is a newer entrant to the prediction markets space, Sporttrade founder and CEO Alex Kane feels the company is well-placed to thrive in the sector, given its history. When it operated as a betting exchange in five states, Sporttrade worked by letting customers trade positions against other users, with prices moving according to available bids and offers.

The firm announced in May it would shut down any remaining state-licensed operations in order to pursue federal registration.

“Receiving our DCM and DCO registrations from the CFTC is a true full-circle moment for our company,” Kane said in a statement. “We founded Sporttrade on the principle that sports markets deserve the same high-performance structure, tight pricing, and regulatory integrity as traditional financial markets.

“By operating as both the exchange and the clearing venue, we are empowering broker partners with superior market quality while giving sophisticated traders the liquidity, transparency, and service they demand. In addition to our exchange business, we’re pleased to have begun clearing discussions with several exchanges who have understood Sporttrade to be a market leader on exchange and clearing technology for the past five years.”

STX also now registered, PredictIt applies

Speaking of sports exchanges becoming federally registered DCMs, enter STX. The sports-focused trading site’s XV Exchange LLC and XV Clearing LLC subsidiaries secured DCM and DCO approvals, respectively, this week. It sets the scene for the Chicago-based company’s planned expansion into the U.S.

STX does not currently operate in the U.S. but has been the only licensed and regulated sports trading exchange in the most-populous Canadian province of Ontario since 2023, offering contracts on football, basketball, baseball, and hockey. Now, it intends to not only host and clear event contracts on its own U.S. platform, but also provide infrastructure for third-party developers and businesses to build prediction market applications using its federally regulated trading and clearing systems.

“We want the best builders out there to have the stability and support they need to focus on the next wave of innovation in financial contracts,” said CEO Justin Deutsch.

STX has not announced a planned launch date for U.S. trading. However, when it does launch, it will join Sporttrade and numerous other prediction markets players offering sports contracts, from financial firms like Kalshi, Polymarket, and Crypto.com to gaming giants like DraftKings, Fanatics, and FanDuel.

Other prediction markets applications remain pending, including a relatively new one from PredictIt that appeared in the CFTC registry this week. That platform has existed for years as a political prediction market operator but is seeking full exchange status. PredictIt’s parent company, Aristotle, sold its separate federally licensed exchange and clearinghouse, Aristotle Exchange, to Underdog this year.

Underdog lets users predict every NFL drive

Underdog had an update of its own this week, unveiling a new in-app prediction markets feature that allows its users to trade on the outcome of every individual drive for select NFL games.

Operators have increasingly leaned into parlay-style “combos” contracts on player prop-style individual markets as they seek to replicate a sportsbook slate on their federally registered platforms.

DraftKings President of Operations Paul Liberman said at a conference in May 2026 that he believed the next evolution of sports prediction markets would be “faster, more dynamic micro markets.” Underdog’s new NFL markets are the latest step down that road, at a time when those kinds of markets remain scrutinized at the state-regulated sports betting level.

Hollywood reportedly blacklists prediction markets

Prediction markets have been mainstream news since 2025, mostly in the context of concerns over insider trading. That has spread to Hollywood, as the Hollywood Reporter claimed that studios and production companies quietly told employees not to engage in prediction market betting on studio earnings, casting decisions, or cinema release dates.

The guidance also prohibits employees from sharing such information with friends and family for the purpose of placing trades on markets.

The Reporter noted that longstanding rules forbid employees from insider trading on the stock market, but that the proliferation of event contracts is recognized as a new danger.

The CFTC’s current guidance maintains that prediction market betting on award shows like The Oscars should be allowed “because the award turns on evaluative judgments, not on measurable occurrences dependent on the participants’ skill or athletic ability in the activity itself.” However, it questioned whether other forms of entertainment like game shows or reality TV competitions should be considered to be ‘gaming’ under the Commodity Exchange Act.