Federal application submitted by Sporttrade to broaden the horizon of sports betting exchange operations
Rewritten Article
Philadelphia-based Sporttrade, known for its sports betting exchange model, is clutching onto a chance to shake up the industry by going national under federal regulation. The company has submitted a request to the U.S. Commodity Futures Trading Commission (CFTC) to make that happen, in a bid to avoid what CEO Alex Kane calls "unfair disadvantages."
Sporttrade operates a platform that allows users to buy and sell contracts based on sports outcomes — more like a financial exchange than a conventional sportsbook. The platform already operates in five states with state gaming licenses. However, Kane stated in a recent interview that it's a dogs' fight to stay afloat under state-level rules while competitors sail through federal regulations risk-free.
Taking a different tack than Sporttrade, competitor Kalshi has opted to operate under the CFTC, skirting state licensing requirements. This approach has landed Kalshi in legal hot water with states like New Jersey and Nevada, who've sued the firm over the issue. Kalshi co-founder Tarek Mansour makes no bones about it: If the CFTC instructs us to quit, we'll call it a day. Otherwise, we won't says Mansour.
Kane believes this is a hurdle holding Sporttrade back from keeping up with competitors. In his letter to Acting Director Caroline Pham, Kane expressed concern that the process may take some time, leaving the CFTC to make a yay or nay decision regarding sports event contracts.
The Road Ahead
To gain CFTC approval, Sporttrade will need to register, join the National Futures Association, pass background checks, and submit to ongoing supervision. The company plans to submit a no-action relief request, outlining its commitment to meeting CFTC standards without being hindered during the decision-making process.
If Sporttrade's request is granted, it would become the first operator in the U.S. to meet both state and federal requirements for sports betting exchanges. Kane hopes this could foster a balance between financial futures trading and online casino regulation, leading to a more competitive market.
Taking a Seat at the Table
Other sportsbook operators like Rush Street Interactive are keeping a watchful eye on the situation. CEO Richard Schwartz voiced his intention to enter the federally regulated prediction market if the landscape shifts in favor of companies like Sporttrade.
Meanwhile, the CFTC is mum on the issue, having recently called off a roundtable on event contracts that was seen as a possible step towards clearer guidelines. As it stands, both Sporttrade and Kalshi remain in a legal grey area due to the canceled roundtable.
- Sporttrade's CEO, Alex Kane, is advocating for federal regulation, hoping it will level the playing field, as competitors like Rush Street Interactive may enter the prediction market if the landscape changes.
- In contrast to Sporttrade, Kalshi's co-founder, Tarek Mansour, is cautious about operating under the CFTC, stating they would cease operations if instructed, but approvals could allow Sporttrade to become the first operator meeting both state and federal requirements for sports betting exchanges, fostering a more competitive market in finance, business, and sports, including sports-betting.
