Sleeper, a leading daily fantasy sports operator in the U.S., has filed a civil lawsuit against the Commodity Futures Trading Commission and acting CFTC chair Caroline Pham. Sleeper is alleging that Pham and the Commission have unlawfully blocked the company’s efforts to bring prediction markets to its platform.
The lawsuit, filed in the U.S. District Court for the District of Columbia, claims that the CFTC blocked approval of Sleeper’s registration with the National Futures Association (NFA) as a Futures Commissions Merchant (FCM). Approval of the application would allow Sleeper to partner with a Designated Contract Market (DCM) to legally offer prediction markets.
Sleeper CEO Nan Wang said in a press release that the lawsuit is important to not just Sleeper, but the wider prediction market industry.
“The CFTC’s unlawful actions present an unfair competitive hurdle to a growing U.S. industry,” Wang said. “This is about more than just one app. It’s about whether these innovative new American markets are truly governed by transparent and fair rules, or by a single decision maker picking winners and losers.”
Prospective CFTC chair nominee leading Sleeper’s lawsuit
The new civil suit comes two weeks after attorney Josh Sterling, of the firm Milbank, sent a letter to Offices of the Inspector General imploring them to investigate the CFTC’s actions regarding Sleeper’s NFA applications. The letter said that the CFTC’s “illegal misbehavior” amounts to “mismanagement, waste, and abuse,” which Inspectors General are tasked with investigating.
Sterling, who is also lead counsel on the Sleeper lawsuit, has previously represented top U.S. prediction market Kalshi in legal cases and he worked at the CFTC from 2019 to 2021, overseeing the Market Participants Division.
More interestingly, Sterling’s name has also been mentioned as a potential nominee to be the new CFTC chair, as the confirmation for President Donald Trump’s initial pick, Brian Quintenz, appears to have stalled.
Gaming lawyer Daniel Wallach says Sterling’s role in the lawsuit and possible CFTC nomination raises questions about including Pham in the lawsuit.
Lead counsel?
None other than Josh Sterling of Milbank, the same firm repping Kalshi.
Sterling is reportedly being vetted for CFTC Chair by the Trump administration. This raises plenty of Q’s about the motivations behind filing suit against Chairman Pham.
What a soap opera. https://t.co/3TQQxRoa3n
— Daniel Wallach (@WALLACHLEGAL) September 29, 2025
The CFTC has been short staffed with the anticipation of a new incoming chair. Acting chair Pham is the sole commissioner left, following gradual exits by the other commissioners since Trump’s inauguration.
Sleeper seeks injunction to prevent further CFTC interference
Sleeper’s legal complaint is the first in its 10-year history. In the lawsuit, the DFS operator says that it had received confirmation from the NFA that the application was complete. The suit says that the NFA was told not to approve the application by the CFTC, “despite having no legal authority to do so.” The delay in approval made it impossible for Sleeper to offer prediction markets in time for the beginning of the current NFL season, which has led to a huge trading volume boost at Kalshi.
“For over 40 years the CFTC has designated responsibility for approving FCM applications to the National Futures Association (NFA).,” Sleeper claims in a press release. “Sleeper submitted its FCM application to NFA in May 2025. Over subsequent months, Sleeper met a series of weekly deadlines set by the NFA, including implementing recommended technical changes to Sleeper’s platform. By August, the NFA confirmed Sleeper’s application was complete and first in line for approval, positioning the company to expand its services for users ahead of the National Football League’s 2025 season.”
Sleeper is asking the court to enter an injunction forbidding the CFTC from further interfering with the FCM registration. The suit is also requesting that the court declare the CFTC’s actions delaying Sleeper’s registration to be “unlawful as an unreasonable withholding of agency action.”
PrizePicks, Underdog ahead of Sleeper in DFS race to prediction markets
The press release also noted that since its initial complaint about alleged CFTC interference, the NFA approved the FCM registration of fellow DFS operator PrizePicks, “a direct competitor” of theirs.
PrizePicks announced on Sept. 23 that it had become the “first sports entertainment operator” to receive FCM approval from the NFA. PrizePicks is now able to partner with a CFTC-approved DCM and begin offering sports prediction markets through its app, similar to how Robinhood and Webull (both registered FCMs) carry markets from CFTC-approved DCM Kalshi on their platforms.
Earlier in September, another top DFS platform, Underdog, announced it would partner with Crypto.com’s CFTC-approved exchange CDNA to begin offering sports markets in select states. Underdog’s NFA registration, under the name UDM LLC, is still listed as pending.
