Smarkets has filed applications to operate in the U.S. as a prediction market operator and bookmaker
The British betting exchange Smarkets has begun its expansion into the U.S. market in two ways: The company has applied for a license from the U.S. Commodity Futures Trading Commission (CFTC) and is seeking authorization to operate as a bookmaker in certain states, according to CNBC.
Founded in 2008, Smarkets filed an application with the CFTC in March for a license to operate in the prediction market. According to the company, the total trading volume on its platform has exceeded $60 billion. At the same time, Smarkets has filed applications to operate as a bookmaker in Illinois, Iowa, and Michigan, said company founder Jason Trost.
Trost explained this dual approach by citing uncertainty over whether the CFTC takes precedence over state regulation in this area. He noted that sporting events are a key source of trading volume for Smarkets, as they are for prediction market platforms Kalshi and Polymarket.
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The regulatory status of prediction markets in the U.S. is a subject of dispute between the federal agency and state authorities. An increasing number of states believe that such platforms operate as illegal gambling services. At the same time, the CFTC has filed lawsuits against several states in an effort to block their attempts to regulate these platforms. Last month, the attorneys general of 44 states also stated that the CFTC cannot be the sole regulator of sports contracts for events available on betting exchanges.
Smarkets already operates as a bookmaker in Indiana. The company also runs a betting exchange in the United Kingdom and operates in Ireland, Malta, and Sweden. According to Trost, Smarkets’ priority remains operating as a CFTC-regulated prediction market exchange, and the company views state licensing as a fallback option due to legal uncertainty.
Trost also said that, in his opinion, some market participants risk damaging the industry’s reputation by not paying enough attention to regulatory requirements. A similar strategy of combining sports betting with prediction markets is already being pursued by DraftKings and FanDuel, which launched their own prediction platforms late last year.
