Smarkets has formally applied for a US licence with the Commodity Futures Trading Commission (CFTC), seeking to launch an exchange-style prediction market in the country just as regulators begin advancing new oversight for the sector.
The London-based firm disclosed on 9 Mar that it had filed an application with the derivatives regulator, marking its first step toward entering the US event-contract market.
Founded in 2008, Smarkets operates one of the largest regulated prediction markets in the UK, reporting about $3bn in annual trading volume. The timing illustrates how quickly the sector is evolving as market operators race to grab a slice of the growing sector in the US.
Filing coincides with regulatory review
The filing, officially submitted on 3 Mar, came the same day the CFTC sent a regulatory action on prediction markets to the White House for review through the Office of Information and Regulatory Affairs, which is part of the federal rulemaking process for significant policy initiatives.
"The U.S. market is currently in a race against time to figure out how to regulate the prediction market," Jason Trost, founder and chief executive of Smarkets, said in a statement. "For the last nearly two decades, we’ve built Smarkets slow and steady," Trost said, adding that the firm would work "with regulators, not around them."
The request sets up two regulatory tracks for its US expansion. The company is pursuing federal approval for its core prediction market exchange, which would list event-based contracts that pay out depending on real-world outcomes. It also plans to seek state-by-state licences for its SBK sportsbook, a traditional sports betting product similar to DraftKings and FanDuel.
Smarkets is backed by quantitative trading firm Susquehanna International Group, which led a $30mn funding round, along with investors including Passion Capital and DTCP.
Competition grows as regulators move
The application lands at a pivotal moment for prediction markets in the US. CFTC Chair Michael Selig recently signalled a regulatory effort to put prediction markets under federal guidance as companies such as Kalshi face state challenges over gambling laws.
Intercontinental Exchange, the company behind the New York Stock Exchange, agreed last year to invest up to $2bn in Polymarket, valuing the prediction platform at roughly $9bn. Other exchanges including Cboe Global Markets have also begun developing prediction-style contracts tied to financial and economic outcomes.
These contracts have fallen into a grey area between derivatives trading and gambling, with regulatory tensions already playing out in courts.
