Sleeper Markets LLC filed a civil case against the Commodity Trading and Futures Commission (CFTC) and its acting chair Caroline Pham on Monday. The suit claims that the CFTC unlawfully blocked Sleeper’s futures commissions merchant (FCM) application, while approving the licenses of its competitors.
Key Takeaways
- Sleeper’s FCM application was complete, according to the National Futures Association, in August.
- Sleeper claims the CFTC, without legal authority, subsequently told the NFA not to approve the application.
- The CFTC approved FCM licenses for Sleeper’s competitors.
Sleeper is a fast-growing fantasy sports platform, covering the NFL, NBA, college basketball and League of Legends. In May, the company applied for an FCM license, allowing it to buy and sell futures contracts. Sleeper wants to be able to offer sporting event contracts like prediction market operators Kalshi and PredictIt.
While the CFTC regulates the prediction market, it delegates FCM license approval to the National Futures Association (NFA). After working with the NFA, Sleeper completed its application. Instead of approving the application, however, Sleeper claims the CFTC told the NFA not to approve it. Sleeper also points out that, by law, an FCM application must be approved once it is complete.
“The CFTC’s unlawful actions present an unfair competitive hurdle to a growing U.S. industry,” Sleeper’s CEO Nan Wang said. “This is about more than just one app. It’s about whether these innovative new American markets are truly governed by transparent and fair rules, or by a single decision market picking winners and losers.”
Adding salt to the wound, the NFA approved an FCM license for PrizePicks, one of Sleeper’s direct competitors, just last week. Meanwhile, PredictIt received its approval earlier this month. And with four weeks of the NFL season already gone, Sleeper is missing out on some of the most lucrative sporting event contracts.
While other sportsbooks and prediction marketeers have a long history of litigation, this is Sleeper’s first lawsuit in its 10-year history. But maybe Sleeper is learning from its competition. PredictIt won a lawsuit against the CFTC in July. Meanwhile, Kalshi won a case against the federal regulator last fall. Both PredictIt and Kalshi subsequently received FCM licenses.
Sleeper’s suit against the CFTC was filed in the U.S. District Court for the District of Columbia. Sleeper is looking for an injunction prohibiting the CFTC from interfering in the company’s FCM licensing approval and to recognize Sleeper’s eligibility for registration under the Commodity Exchange Act.
