Tomato, to-mah-to. Prediction market, betting exchange.
For many Americans, the concept of a “prediction market” is relatively new. The federally regulated exchanges and their "yes/no" style of trading only really entered the mainstream when they began offering contracts tied to sporting events in late 2024, irking state gambling regulators who see that product as just unlicensed or illegal sports betting.
For Smarkets CEO Jason Trost, though, it’s a business he’s run for more than 15 years across the Atlantic, and he's now keen to operate stateside.
“The important thing to know is that a betting exchange and a prediction market are exactly the same thing,” Trost told Covers in an interview this week. “They're just different words for the same thing.”
- Smarkets is seeking CFTC approval to bring its 15-plus years of betting-exchange experience and more than $50 billion in lifetime trading volume to the U.S. prediction-market space.
- The U.K.-based operator plans to differentiate itself with an easy-to-use interface, competitive pricing, reliable technology, and experience navigating regulated markets and building liquidity.
- Smarkets is also pursuing state sportsbook licenses as a hedge against legal uncertainty around sports event contracts, while remaining interested in U.S. markets for elections, economics, and other non-sports events.
Trost (who grew up in Connecticut) and Smarkets have technically offered a betting exchange in the U.K. since 2009, under the watch of local gambling regulators.
It’s on the Smarkets exchange (or Smarkets' SBK sportsbook, which is really just a sportsbook UI that sits atop a prediction market) that punters can turn to for wagering on soccer, politics, and horse racing, among other things.
The model of matching buyer and seller for sporting and other events has so far translated into more than $50 billion in lifetime trading volume for Smarkets, which competes for business abroad with the likes of Betfair and traditional sportsbooks.
In March, however, the London-based company also filed for a license from the U.S. Commodity Futures Trading Commission (CFTC). If successful, that license would let Smarkets operate as what is technically called a designated contract market (DCM) but is more commonly known these days as a prediction market.
Room for one more?
While the prediction market space is more crowded than it used to be, with Kalshi and Polymarket now fending off challenges from prediction platforms offered by DraftKings, Novig, and ProphetX, among others, Trost believes Smarkets’ experience abroad is an edge that others lack.
That experience includes dealing with multiple regulators, maintaining and gaining liquidity for markets (including working as a market maker itself), and competing in a crowd.
“I think a lot of the new guys in the United States, they're kind of throwing a bunch of stuff against a wall and seeing what's going to stick,” Trost said. “But we've had all those learnings already, so we can do a lot less, in some cases, irresponsible experimentation, and more focus on best prices, lowest transaction fees, uptime, stability with the exchange, just doing the core really well and the regulation really well.”
We just launched a new Smarkets interface (and made an ad for it). Really happy with how both turned out. Big thanks to the team. https://t.co/h5dd1C3rH3
— Jason Trost (@jasontrost) September 11, 2026
Smarkets also plans to come to the U.S. market with a recently refreshed interface that Trost says reflects its maturing ambitions.
When the company first launched, it was looking to “resegment” customers from Betfair and gain market share, which meant not deviating too far from what was already on offer.
Now Smarkets wants an interface that will be easier to grasp by the general public, not just betting exchange veterans. That could translate well in the U.S. market, where there are many people just getting their first taste of exchange trading.
“The big thinking behind the current interface is that anybody who likes trading anything should be able to look at this, understand what's going on, and be able to use it,” Trost said.
First, though, Smarkets needs the blessing of the CFTC to launch its U.S. prediction market. Given its roots abroad, it has experience in seeking approval from multiple regulators.
“We have a lot of experience doing things in a regulated market,” Trost noted.
Still, Trost said he doesn't have any “visibility” on when a designation from the CFTC might come, just that he sees their discussions as going well at this stage.
“We're in constant communication with them, talking about our application,” he said. “We're following the process that they've laid out, and we're working expeditiously with them to get the designation.”
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Got my mind set on you
Yes, Trost and Smarkets want to be in the U.S. as a CFTC-regulated DCM. Yet they are working on a different route entirely in the U.S., which could come in handy depending on how sports event contracts offered by prediction markets fare in the courts.
Multiple state gambling regulators are challenging the legality of those products. If sports event contracts are ultimately deemed illegal, it would knock out a huge chunk of business for prediction markets.
Trost said he backs the CFTC’s legal position, which is that sports event contracts and prediction markets are federal jurisdiction and not subject to the wishes of state-level gambling regulators.
Even so, Smarkets is pursuing state-level sports betting licenses for its SBK product as, you could say, a hedge against adverse legal rulings or a change in thinking at the CFTC. So far, the brand is live only in Indiana (it was previously live in Colorado as well) but is eyeing licensure in additional states, such as Illinois, Iowa, and Michigan.
“I think that the CFTC has the legal jurisdiction over (prediction markets),” Trost said. “But in the case where it's ultimately ruled that they don't, or the CFTC changes their mind, we want to be active in the American market.”
This @OutlierDotBet survey done for Citizens found that only 12% of respondents chose prediction markets over sportsbooks because of a lack of legal sports betting where they live. The leading reason (35%) was "softer prices, since I am trading against the public." pic.twitter.com/Zni92n5hfg
— Geoff Zochodne (@GeoffZochodne) September 22, 2026
Trost also wants to be active in the U.S. as a CFTC-regulated DCM even if sports event contracts are struck down by the courts. He still sees enough business that could be done on elections, economics, and other subjects.
“And that's when I think prediction markets are at their best, where the user can get some hedging utility and the public can get some real pricing utility as well,” he said. “That's when prediction markets are, you know, chef's kiss. It's the best prognostication we have for the future, and I think we should lean into that as a species more.”
Trost also believes a federally regulated model is better for the consumer than the state-by-state regulation of sports betting, as he sees the latter's higher costs as eventually getting passed on to the consumer.
A deal is a deal
Interestingly, Smarkets' SBK product has historically been a sportsbook interface that sits atop an exchange.
“You can think about it like a broker,” Trost said. “So it's a broker that sits on top of our exchange, and we present it as a sportsbook. Because we learned through many, many years that a lot of consumers don't like bid and offers and trading and buying and selling, and it's very confusing to them. They just want a price, place the bet, and go on with their day.”
Trost’s definition of a sportsbook is just an exchange with a lot of features removed. Start with an exchange, remove the ability to buy and sell, allow only one person to take the other side of all bets, and remove any haggling over price, and you’ve got a sportsbook, he explains.
“So, I think at its core, a sportsbook contract is the same thing as an exchange contract,” he said.
In the U.S., however, SBK will operate as a traditional sportsbook. Trost and Co. will be the only counterparty for bettors (the "house"), not a potential variety of others as with prediction markets. That’s just how it will have to be in some states.
Wow - Pensando A Te goes from last to first to win the Rockfel Stakes! A 2027 Guineas contender?
— Smarkets (@smarkets) September 25, 2026
Another Group 2 is next, the Joel Stakes.
Will you buy or sell hot favourite Talk Of New York at 1.57?pic.twitter.com/GVrXKNInr2
Another difference between Smarkets abroad and its stateside version is that the latter will, at least for the foreseeable future, have no horse racing markets.
While those are critical in the U.K., the current regulatory and legal climate in the U.S., which includes a federal law focused on horse race wagering that would be tricky to claim preemption over, has helped keep the sport of kings off federally regulated exchanges. One major operator, Churchill Downs, has maintained that prediction markets would have to seek permission from tracks and regulators before dabbling.
Trost said there are no immediate plans to offer horse racing, but he would “love” to someday offer the sport. From a consumer perspective, Trost sees it as making a lot of sense.
For one thing, the Smarkets CEO said there is “real value” in betting exchanges and prediction markets making sports betting much more fair for the bettor. They could do the same for wagering on horse racing even if, again, there are no plans.
“Because sports betting has no price pressure,” he said. “Bookmakers silo liquidity. They block winners. There are all these negative attributes that sportsbooks do to customers, and in a lot of cases, customers don't even realize it. And so, horse racing is a classic industry where they have a regulatory advantage position. There's not enough competition, and ultimately, consumers will pay 10, 20, 25% margin to place a bet on horse racing when it should be one or 2%. And I think prediction markets are such a breath of fresh air to bring sensible financial technology to an old industry. ”
