Sporttrade has become the first state-licensed sports betting operator to formally notify the Commodity Futures Trading Commission that it intends to seek federal approval to offer nationwide sports prediction markets.
In an April 25 letter to the agency, Sporttrade CEO Alex Kane said the move was necessary to avoid “irreparable harm” as federally regulated competitors like Kalshi and Crypto.com begin offering similar sports event contracts in all 50 states without having to comply with the same gaming laws, tax burdens or compliance costs.
Sportico first reported the filing.
Sporttrade makes a regulatory first
Sporttrade operates a real-money sports betting exchange regulated as a sportsbook in five states — New Jersey, Colorado, Arizona, Iowa and Virginia. While other companies have sought to bypass state gambling regulations entirely by offering these contracts under the Commodity Exchange Act, Sporttrade is the first entity overseen by state gaming commissions to request no-action relief from the CFTC to participate in the same market.
“We champion this exchange model because we think it’s better for the consumer,” Kane told Legal Sports Report in a phone interview. “We’ve paid a lot of money and energy to get regulated, and we want to show we can operate by the same federal rules that others now benefit from without doing the same work.”
One of those states, New Jersey, is notably among several that have sued to stop sports prediction markets.
“I think if regulators have a chance to sit back and read the letter, they’ll see we have a point,” Kane said. “This model works well right now for big operators and vendors, but we have to be thoughtful about what kind of ecosystem we want to build going forward.”
A fork in the regulatory road
Kalshi and Crypto.com began listing sports markets earlier this year using their status as federally registered Designated Contract Markets. Their filings have drawn sharp criticism from state regulators, tribal gaming organizations, professional leagues, and the American Gaming Association, which argue these markets are unregulated sports betting.
But the CFTC has yet to clarify its stance. Earlier this week, the agency canceled a long-awaited public roundtable that was expected to examine sports event contracts — a move that leaves operators and critics alike uncertain about what comes next.
Meanwhile, companies like Kalshi reported handling over half a billion dollars on March Madness, roughly 16% of the money the AGA expected US sportsbooks to handle.
“We are proud to be regulated by the states we operate in,” Kane wrote to the commission. “But if other companies can now offer the same product with nationwide reach and fewer costs, we should be allowed to do the same — or no one should.”
Betting exchange vs. prediction market
Unlike traditional sportsbook that sets lines and accepts wagers against the house, Sporttrade functions as a marketplace where users can buy and sell bets with one another. That structure resembles the sports contracts Kalshi and Crypto.com have begun listing, with Sporttrade arguing it already complies with many of the technical and surveillance standards required of CFTC-regulated markets.
In his letter, Kane said Sporttrade is preparing a formal no-action request, asking the CFTC to allow it to list a small set of sports contracts while it demonstrates compliance with the agency’s core principles. He argues that could give consumers more competitive and transparent options without compromising regulatory safeguards.
Implications for US sportsbooks
DraftKings had quietly applied for National Futures Association membership earlier this year and registered a new product called “DraftKings Predict,” signaling its intent to test the waters of federally regulated prediction markets. But earlier this month, the company withdrew the effort.
BetMGM CEO Adam Greenblatt addressed the issue on a recent earnings call, calling prediction markets “both a risk and an opportunity.”
FanDuel parent Flutter also weighed in, with CEO Peter Jackson telling investors the company is monitoring the space, but that prediction exchanges don’t yet offer the “richness” of a full sportsbook product.
Some investors believe the major US sportsbooks are waiting on word from the CFTC before proceeding, wary of straining relationships with state regulators who have taken issue with prediction markets. If CFTC approval comes, the model could offer established operators a gigantic backdoor into states where traditional licenses are restricted or unavailable.
