Sporttrade has been registered by the US Commodity Futures Trading Commission as both a designated contract market (DCM) and a derivatives clearing organisation (DCO), giving the former state-licensed betting exchange a federal route to offer sports event contracts nationwide.

The Philadelphia-based company announced the approvals in a statement released on 2 November. It said the exchange and clearing functions would be rolled out in phases, starting with selected flow and liquidity providers, with a pipeline of brokers and institutional partners to follow in the coming months.

Broker-led model

Sporttrade is positioning itself as market infrastructure rather than a consumer brand. As a DCM it can support intermediated trading through futures commission merchants, as well as direct-access participants, introducing brokers and independent software vendors. Its DCO registration allows it to clear and settle trades for self-clearing members and intermediaries on a fully collateralised basis, and to clear for other DCMs. The company said it is in clearing discussions with several exchanges.

The dual registration matters because it lets Sporttrade operate both the trading venue and the clearing house behind it. Many newer prediction market entrants have instead had to partner with an existing exchange or clearing member, which adds cost and limits control over product design and settlement.

Fliff, the social sportsbook, is among the brokers being onboarded and will route customer order flow to the exchange, pending regulatory approval.

“Receiving our DCM and DCO registrations from the CFTC is a true full circle moment for our company,” said chief executive Alexander Kane.

From state licences to federal oversight

The approvals complete a pivot that Sporttrade began earlier this year. The company filed its DCM and DCO applications in February and, while awaiting a decision, wound down its betting exchange in the five US states where it held sports wagering licences, with operations ending by 26 June, according to contemporaneous reports.

The decision arrives at a busy moment for the CFTC’s prediction markets agenda. The regulator has moved to define event contracts as swaps while carving out traditional sportsbooks, and last month it ordered Novig and ProphetX not to list self-certified sports contracts. Sporttrade is one of a number of applicants that have sought their own exchange and clearing registrations in the past year.

The roughly nine months between filing and approval is in line with the faster review times the CFTC has shown for event-contract venues this year, as the agency under its current leadership has taken a more permissive view of sports contracts than state regulators.

Why it matters

Sporttrade’s licence gives sportsbook-style brands another option for accessing federally regulated sports contracts without building their own exchange. Several US operators have launched prediction products through tie-ups with existing DCMs, and a clearing-capable venue that markets itself to brokers adds competition on spreads and execution, which Sporttrade has made the centrepiece of its pitch.

The approval does not settle the wider fight between federally regulated event-contract venues and state gaming regulators, several of which continue to argue that sports contracts are wagers subject to state law. How quickly Sporttrade can move from its initial liquidity providers to a broad broker network will indicate how much appetite there is for another sports exchange in an increasingly crowded field.

The Australian Securities and Investments Commission (ASIC) has said it is not convinced that prediction markets for retail clients are in the public interest, in a statement that likens the contracts to bets and signals that a local market licence for such a platform is unlikely in the near term.

“ASIC is not currently convinced that prediction markets for retail clients are in the public interest,” the regulator said in the statement, attributed to Chair Sarah Court. “Prediction market contracts have all the features of a bet.”

Speculation, not investment

ASIC described prediction market contracts as highly speculative products with all-or-nothing outcomes. It noted that many of the events traded, such as rainfall or sports results, have no connection to investment, which it said raises doubts about whether the contracts should be treated as investment products at all.

The regulator also flagged integrity risks, including the misuse of confidential information, market manipulation and disputes over how outcomes are determined.

Under section 798A of the Corporations Act 2001, ASIC must consider whether granting an Australian market licence would be in the public interest. The statement indicates that, on its current view, a platform seeking to run a licensed prediction market for retail users in Australia would struggle to clear that test.

Binary options precedent

ASIC said its approach is consistent with its treatment of binary options, which it banned for retail clients in 2021 and later extended for a further decade. Both products involve speculation on a binary outcome, the regulator said, although binary options are typically sold over the counter through brokers while prediction markets run on exchange-style platforms. It added that parts of Europe and the UK have also restricted event contracts with similar characteristics.

The UK comparison is a live one for the industry. IG Group, which holds Australian financial services licences, has applied for a UK gambling licence to offer prediction markets there, effectively accepting that the product sits inside gambling regulation rather than financial services.

Offshore access and licensees

The statement warned that Australians who use offshore prediction markets directly online “do not have protections under Australian law”. It also put local financial services firms on notice that, where they facilitate access to offshore prediction markets, “all their licence obligations under Australian law continue to apply to them in this activity”.

ASIC did not name any platform, and the statement does not announce new rules or a consultation. It follows an August warning on the regulator’s Moneysmart consumer site that no prediction market is licensed in Australia.

The intervention has been widely covered by the Australian financial press and by EGR, which highlighted the regulator’s comparison with betting. It lands as US platforms Kalshi and Polymarket push for international expansion on the back of large funding rounds.

Australia has been an attractive target for event contract providers because of its high per-capita gambling spend and well-developed online wagering market. The ASIC position makes that route considerably harder for financial services firms, which had hoped to treat sports and event contracts as a derivatives product rather than a wager.

A gambling question for Canberra

By describing the contracts as bets, ASIC has in effect pushed the question back towards Australia’s gambling framework, where online wagering is licensed by the states and territories and the Interactive Gambling Act restricts many forms of online gambling. Any operator hoping to offer sports or event contracts to Australians now faces two regulators and two bodies of law, with the financial regulator having made clear it does not see the product as its natural home.

The full statement is available on ASIC’s website.

DraftKings, FanDuel and Fanatics have begun withdrawing their prediction market products from Utah, days after the state’s attorney general filed criminal charges against Kalshi and its two co-founders. The three sportsbook operators are the first major US betting brands to retreat from a state over the event contracts fight, while Kalshi and Polymarket have kept their markets live.

DraftKings Predictions removed sports, politics and novelty contracts for Utah customers late on Wednesday 28 October. FanDuel Predicts followed at 10am ET on Friday 30 October, and Fanatics Markets said it will stop accepting trades in the state on Wednesday 4 November. The moves were first reported by Legal Sports Report and SBC Americas.

Different scopes of withdrawal

The three exits are not identical. DraftKings said that “effective immediately, sports, novelty, political, and certain other event contracts are no longer available”, but Utah users can still trade financial contracts tied to stocks, commodities and crypto prices. FanDuel said “event contracts on sports, politics, and novelties will no longer be available to customers in Utah”, leaving economic benchmark and financial indicator markets in place. Both companies said existing positions will remain open and settle as normal.

Fanatics is going further and ending every event contract it offers in the state. “Due to recent developments, we are stopping trade placement on Fanatics Markets in the state of Utah on November 4,” a spokesperson said.

The timing matters for the operators’ wider prediction market strategies. All three launched event contract products this year as a way to reach customers in states without legal sports betting, and Utah was one of the clearest examples of that strategy: a state where no form of sports wagering is permitted under state law.

Underdog still listed Utah as an available region for its prediction markets as of Friday and did not respond to requests for comment, according to Legal Sports Report.

Criminal case against Kalshi

The retreat follows Utah Attorney General Derek Brown’s decision last week to file criminal charges against Kalshi and co-founders Tarek Mansour and Luana Lopes Lara. The 14 counts include a second-degree felony charge of pattern of unlawful activity for each founder and 12 third-degree felony counts of online gambling promotion. The charges are allegations and have not been tested in court.

According to the state, an undercover investigator opened a Kalshi account from a Utah IP address and placed 12 sports event contract trades between 13 and 26 September in Salt Lake and Davis counties, with each trade generating a fee.

“Gambling is illegal in Utah, whether you place the bet, run the game, or promote it,” Brown said. Kalshi called the charges “a crazy overreach” and said “Utah is clearly playing politics”.

The criminal case came on top of the state’s civil action, in which Utah sued Kalshi in state court as a public nuisance. Utah is one of only two US states with no legal form of gambling.

Federal pushback

The dispute is also being fought at federal level. The Commodity Futures Trading Commission and the Department of Justice have sued Utah to block its crackdown, arguing that event contracts listed on CFTC-regulated exchanges fall under exclusive federal jurisdiction. Kalshi has taken its own preemption argument to the Tenth Circuit after losing at district court level.

For the licensed sportsbook groups, the calculation is different from that of the prediction-market-only platforms. DraftKings, FanDuel and Fanatics hold state gaming licences across dozens of US jurisdictions and have more to lose from a criminal confrontation with a state attorney general than Kalshi or Polymarket, whose businesses rest almost entirely on the federal preemption argument.

The withdrawals give Utah an early practical win while the federal cases proceed, and other states weighing enforcement against prediction markets are likely to take note of how quickly the regulated operators stepped back.