- CEO Jason Trost says U.K.-based betting exchange to seek CFTC approval
- Trost says political markets make U.S. attractive
- CEO says he thinks sports markets have 50/50 chance of being struck down by judges
London-based prediction market Smarkets (known as a “betting exchange” in the U.K.) will seek approval from the Commodity Futures Trading Commission to launch in the U.S. as a Designated Contract Market (DCM). Smarkets CEO Jason Trost talked about the company’s intentions in a recent appearance on Zero Latency, a podcast from gaming industry consultancy and market research company Eilers & Krejcik Gaming.
When asked if Smarkets was pursuing CFTC approval, Trost said:
“Of course. The water’s warm. If that sports thing holds, why not? You have to.”
Trost says sports market success attractive, but election markets are key
“That sports thing” Trost mentioned is a reference to the ongoing court battles that CFTC-approved prediction market platform Kalshi is facing. In some states that have legalized sports betting, legal action has been initiated in an effort to halt the availability of Kalshi’s sports markets, which let users trade on single-game and series outcomes. The states that have sent cease-and-desist orders to Kalshi say those sports markets amount to unregulated sports betting.
Kalshi has won preliminary injunctions against Nevada and New Jersey, while a similar case in Maryland is ongoing. Analysts believe the outcome of those cases will determine whether or not Kalshi and other similar platforms will be able to continue to offer contracts on sporting events, which have been lucrative for prediction market exchanges.
Trost, who said he estimates it will take Smarkets “about $2 million and two years” to get CFTC approval, doesn’t feel like the sports component is key to bringing Smarkets to the U.S. He said the trading volume for political markets, particularly ones related to elections, makes coming to the U.S. very attractive on its own.
“Back in 2017, without politics, I thought (entering the U.S.) was not that interesting,” Trost said. “With politics, it’s 100% interesting and with sports it’s a million percent interesting. So, with what Kalshi has done, blowing the regulatory door open, it’s a no-brainer for us as a business to get a CFTC license.”
Trost said he feels there is a 50/50 chance that some of the state legal action will be successful and prediction markets will have to cease offering sports markets on a national level.
Smarkets previous entered U.S. with SBK sportsbook
Founded in 2008, the Smarkets platform has been a popular betting exchange in the U.K. and several European countries. The platform is similar to prediction markets platforms like Kalshi and Polymarket, where users can trade on future outcomes in the worlds of sports, politics, entertainment and other events.
Smarkets entered the U.S. in 2020 via its sportsbook product, SBK. The SBK sportsbook, which only featured sports markets and drew odds and pricing from the Smarkets betting exchange, launched in Colorado in 2020 and Indiana in 2022. Now only available in Indiana, Smarkets didn’t follow through with announced plans to launch in Iowa and appears to no longer be operating in Colorado, suggesting the platform has refocused U.S. efforts on a DCM launch.
Smarkets would join increasingly crowded U.S. prediction exchange market
With CFTC approval and oversight, Smarkets would be able to self-certify its prediction markets and legally offer them to traders in all 50 states. With more platforms vying for CFTC approval, the U.S. marketplace for prediction market exchanges will likely become increasingly crowded. In mid-June, Railbird Exchange became the latest platform to be granted DCM status by the CFTC.
Sports betting companies like FanDuel, DraftKings and Penn Entertainment have all publicly expressed interest in developing prediction market platforms or partnering with an existing platform. But those endeavors may be put on hold until Kalshi’s legal wranglings over nationwide sports event contracts works itself out.
Given Trost’s comments, Smarkets appears set on coming to the U.S. whether they can offer sports markets or not, giving consumers even more options in the prediction market space.
