Sleeper Gets FCM Status, Crypto Bill Threat, and Coalition Adds Firepower in DC
The Commodity Futures Trading Commission (CFTC), with Mike Selig at the head, is already showing just how friendly it will be to the nascent prediction market industry.
On Wednesday, Sleeper became a registered Futures Commission Merchant (FCM). That designation allows the platform to offer event contracts from CFTC-regulated prediction market platforms like Kalshi and Polymarket U.S.
Fantasy sports app Sleeper joined the National Futures Association (NFA). The NFA is a self-regulatory organization for companies in the derivatives industry, enforcing standards among its members, and NFA membership is one of the requirements to become an FCM.
Under Acting Chairman Caroline Pham, the CFTC refused to allow Sleeper to become an FCM. Sleeper sued the CFTC in September 2025. The company argued that the CFTC’s delay in approving Sleeper gave an unfair advantage to other gaming companies like PrizePicks that have been able to offer sports contracts.
Milbank Partner Josh Sterling cited the CFTC’s “new leadership” as one of the developments that allowed Sleeper to become an FCM.
While Selig may still rely on the courts to resolve the legality of sports event contracts, the CFTC isn’t expected to remain a proactive roadblock. Sports contracts may even be taken up by Congress.
Draft language in the upcoming crypto bill
On Monday, Senator Tim Scott released the latest draft of the CLARITY Act, the next major piece of crypto legislation. It outlines the latest requirements for regulated crypto transactions, including compliance with the Bank Secrecy Act.
However, gaming journalist Dustin Gouker received draft language that would prohibit sports contracts on regulated prediction market exchanges. It is not currently part of the crypto bill. While legislators have questioned the CFTC about sports contracts, no lawmaker has described plans to incorporate this language into the CLARITY Act.
Some weeks, sports contracts have composed 90% of prediction market trade volume. The prediction market industry has much to lose if sports contracts become illegal.
Coalition for Prediction Markets makes key hires
Major CFTC-regulated prediction market platforms, including Kalshi, Robinhood, Underdog, and others, formed the Coalition for Prediction Markets in December 2025. The trade group lobbies for federal regulation of prediction markets instead of state-by-state enforcement.
The Coalition recently hired two former Congressmen, Sean Maloney and Patrick McHenry. These hires come as states continue ramping up legal pressure on prediction markets over sports contracts. Tennessee became the latest state to send a cease-and-desist letter to Kalshi demanding that the company block sports contracts. A judge issued a temporary restraining order allowing Kalshi’s sports contracts to remain in Tennessee on Tuesday.
As the prediction market industry awaits the Third Circuit opinion, the prediction market proponents are becoming more organized and expanding its roster of supporters.