Smarkets, a UK-based betting exchange founded in 2008, is pursuing a dual regulatory strategy to establish operations in the United States. The platform, which has generated over $60 billion in lifetime trading volume, filed for a Commodity Futures Trading Commission license in March while simultaneously seeking sportsbook approvals in Illinois, Iowa, and Michigan. Company founder Jason Trost explained that this two-pronged approach stems from uncertainty surrounding federal regulatory authority over prediction markets.
The company’s strategy reflects a broader regulatory conflict between federal and state authorities. The CFTC has sued multiple states attempting to regulate prediction market platforms, while 44 state attorneys general have argued that the federal agency should not have exclusive control over sports-related event contracts. Several states have classified prediction markets as unlicensed gambling operations, though platforms like Kalshi argue that states cannot shut down federally licensed exchanges.
Smarkets’ preference is ultimately to operate under CFTC jurisdiction as a prediction markets exchange rather than navigate individual state regulations as a sportsbook. Trost emphasized the company’s commitment to responsible compliance, criticizing competitors for acting irresponsibly and circumventing regulations. With existing operations in Ireland, Malta, Sweden, and Indiana, Smarkets brings experience managing diverse regulatory environments. Major competitors including DraftKings and FanDuel have similarly launched prediction market platforms to complement their established sportsbooks.
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