ProphetX filed an application with the U.S. Commodity Futures Trading Commission (CFTC), signaling its intent to ditch its past as a sweepstakes betting site to become a prediction platform.
If the application is approved, ProphetX would have operated as a state-regulated sportsbook, a sweepstakes platform, and a prediction exchange.
Key Takeaways
- The company has a background working as a sports betting operator.
- ProphetX will not create an affiliated trading arm to provide liquidity.
- The application included a plan to launch a Request for Parlay feature.
ProphetX could become the first CFTC-licensed trading outlet built specifically for sports-based contracts.
ProphetX is currently facing an increased amount of regulatory scrutiny as state gaming regulators continue to push back against sweepstakes platforms. If it is granted approval by the CFTC, it would not need to abide by state regulations, so long as it is in compliance with its federal obligations.
According to the filings, ProphetX is aiming to achieve dual-registration as a Designated Contract Market (DCM) and a Derivatives Clearing Organization (DCO). That means that its users would be allowed to trade and settle contracts directly on the platform.
“Our goal has always been to build a transparent, compliant and innovative marketplace that treats sports outcomes with the same integrity and structure as any other asset class,” said Dean Sisun, CEO and co-founder of ProphetX. “Filing for DCM and DCO status is the next logical step in legitimizing the future of user-driven sports trading.”
Achieving CFTC licensing would allow ProphetX to join other prediction platforms in capitalizing on markets, including California and Texas, where traditional legal sports betting doesn’t exist.
ProphetX’s parlay system
One of the key features of ProphetX’s proposed platform is the Request for Quote (RFQ) parlay mechanism, which would allow users to combine multiple contract outcomes. They would then be able to trade them with other parties.
The mechanism “mirrors institutional trading protocols” used in financial markets, giving users more freedom and flexibility.
“The RFQ Parlay Mechanism is a fundamental innovation,” added Jake Benzaquen, co-founder and CMO of ProphetX. “It allows for dynamic price discovery and efficient multi-leg exposure – features that have long existed in traditional markets but are entirely new to the sports derivatives domain.”
With less than two months until the end of the year, ProphetX does not expect to receive a decision on its application until 2026.
The company promised to work with the CFTC and its stakeholders to remain in compliance with the federal regulations and consumer standards.
Prediction platforms are booming
Prediction platforms have rapidly grown in popularity recently. Kalshi kicked off the fad of sports contracts earlier this year, prompting many other platforms to create contract markets of their own.
ProphetX believes that its sports-only strategy will allow it to gain an upper hand with its customer base. Meanwhile, Kalshi and Polymarket accepted more than $500 million in trades related to the outcome of the New York City mayoral race last week.
A decision on the application will likely be delayed due to the government shutdown.
