economy
Prediction markets and sports betting: How this UK exchange is trying to do both in the U.S.
Smarkets is entering the U.S. prediction market race but also applying to run as a sportsbook within states amid regulatory uncertainty at the federal level.
TL;DR
- Smarkets is pursuing a dual strategy to enter the U.S. market, applying for CFTC regulation as a prediction market and seeking sportsbook licenses in states.
- The company's founder, Jason Trost, cited legal ambiguity regarding federal preemption as the reason for the dual approach.
- Smarkets has pending applications for sportsbook operations in Illinois, Iowa, and Michigan, and already operates as a sportsbook in Indiana.
- The regulatory landscape for prediction markets is contested, with states arguing they are illegal gambling platforms and the CFTC suing to block state regulations.
- Smarkets prefers federal regulation under the CFTC, viewing prediction markets more as a hedge than an active state-level operation.
- Other platforms like DraftKings and FanDuel have also launched prediction markets, with FanDuel noting faster customer acquisition in states where sportsbooks are scrutinized.
- Smarkets aims to be a "good actor" by complying with regulations, drawing on experience from operating in four European countries with different regulatory landscapes.
- Trost criticized some competitors for acting irresponsibly and potentially damaging the industry's reputation.