Things are moving fast and furious in the world of prediction markets, with multiple operators and concerned bystanders offering their opinions on how federally regulated prediction markets should operate.
One opinion offered on Thursday came from ProphetX cofounder and CEO Dean Sisun, who wrote a letter to the Commodity Futures Trading Commission (CFTC) in connection with the meeting of the federal regulator’s Innovation Advisory Committee.
- ProphetX CEO Dean Sisun urged the CFTC to help preserve a two-sided, peer-to-peer exchange model for prediction markets, rather than one that may mimic traditional sportsbooks.
- Sisun argued prices should be set competitively by buyers and sellers, with affiliated market makers allowed but supplementing liquidity instead of being the sole provider.
- His comments come as the CFTC is working on rules for sports event contracts amid ongoing legal battles with states over whether prediction markets are effectively sports betting.
Sisun isn’t a member of the advisory committee, but he is the chief executive of a sports-focused, federally regulated prediction market operator that launched in June.
According to Sisun, the industry should stick as closely as possible to a true exchange model, pairing buyers and sellers, rather than the state-regulated sports betting models where the book is the seller and the bettors are customers.
“A two-sided, peer-to-peer exchange model operating under durable federal oversight is not simply another way to package the state-regulated sportsbook model,” Sisun wrote. “It is a structurally distinct, more consumer-favorable way to bring financialized sports event contracts into the financial system, and the Commission’s developing market-structure rules should preserve the neutral, competitive price formation that makes that distinction meaningful.”
The suggestions from Sisun come as the CFTC continues to ponder new rules for sports prediction markets and the way in which they are offered.
Those consultations are happening as the CFTC, prediction market operators, and numerous state gambling regulators are locked in legal combat over the legality of sports event contracts.
Our CEO @DeanSisun submitted a comment letter today to the CFTC urging to preserve two-sided exchanges in Sports Prediction Markets built to benefit consumers.
— ProphetX (@ProphetX) August 20, 2026
Read More Here: https://t.co/j2Ksu6pdw1
Many states see the trading of those contracts as just sports betting by another name and therefore believe they should be subject to state gambling laws. However, the exchanges and the CFTC argue the whole business falls under federal legislation and regulation that preempts state-level gambling rules.
While these courtroom battles continue, the CFTC has been trying to clarify the prediction market business.
The commission received hundreds of comments from the public and interested stakeholders regarding possible guidelines that would govern sports event contracts, and it is now listening to feedback on regulations that would apply to prediction markets with affiliated market makers.
Swiss, please
That second round of rules could blunt one of the concerns about prediction markets. Some of the exchanges have affiliated market makers taking the other side of trades on their platform; to some, that just makes it look like the prediction market is similar to the “house” of an online sportsbook.
The CFTC is now proposing to “distinguish bona fide market making” from “directional proprietary trading.”
“Such a bona fide market maker would be a firm that is contractually obligated to maintain continuous two-sided quotations, that is filled only after unaffiliated members at every price level ... and that may not establish directional positions other than in connection with its obligation to maintain two-sided quotations,” the proposal says.
That proposal could align with what Sisun is seeking. ProphetX says it does not “hold a directional position in any outcome,” differentiating itself from the state-regulated model for online sports betting in the U.S.
Sisun wrote that those sportsbooks are, “in economic terms, the seller of a product,” setting the price, standing as counterparty, and earning revenue from the win-loss margin.
“That seller-customer structure is not an inherent feature of sports event outcomes,” Sisun wrote. “It is simply the model state-regulated sportsbooks have used. A two-sided exchange can offer exposure to a similar underlying event on fundamentally different economic terms, with prices formed through competition among market participants rather than set by the venue as principal.”
We have officially speed-run our way to the "drop the 'risk-free' talk" stage of prediction market regulation. From today's CFTC Staff advisory: pic.twitter.com/9B2bAigBEW
— Geoff Zochodne (@GeoffZochodne) August 12, 2026
While Sisun said affiliate market makers serve important functions, he wants room for some daylight enshrined in the rules.
“Where sports event contracts are listed and cleared as derivatives on a (prediction market) and offered as exchange products to the public, the Commission’s market-structure rules should preserve the competitive price formation and venue neutrality that an exchange can deliver, rather than allow exchange form to reproduce the seller-counterparty economics of the state sportsbook model,” he wrote.
So-called “affiliated liquidity” may help “support or bootstrap” any given market, “but it should supplement rather than displace independent price formation,” Sisun added.
What the ProphetX CEO would like to see is the CFTC’s rules for market structure and potential conflicts protect a market structure in which sports event contracts can trade on more neutral, competitive terms.
“For sports event markets, rules should preserve room for customers, professional market makers, and other independent participants to compete on both sides of the market while the venue remains neutral as to outcome,” he wrote.
