ProphetX, America’s first sports-native prediction market, has asked the US Commodity Futures Trading Commission (CFTC) to clarify how registration requirements should apply to technology companies that give customers access to federally regulated sports event contracts.
The company made the request in a comment letter responding to the CFTC’s review of regulations that could support innovation and competition among financial technology firms.
ProphetX said the regulator should consider using its authority under Section 4(c) of the Commodity Exchange Act to establish a broader framework for eligible sports event contracts and qualifying technology service providers.
The proposal focuses on firms that offer passive front-end software through which customers can access contracts traded on CFTC-regulated markets.
ProphetX said those providers may face uncertainty over whether their activities require registration as introducing brokers under Section 4d(g) of the Commodity Exchange Act.
Technology companies have generally addressed the issue by seeking individual no-action relief from CFTC staff.
ProphetX said that approach has helped in specific cases but is poorly suited to a market expected to include a growing number of exchanges, fintech firms and consumer-facing platforms.
The company argued that continued reliance on case-by-case relief could discourage commercial partnerships and make investors more cautious about funding compliant market infrastructure.
“As sports event contracts become increasingly accessible through technology platforms, regulatory certainty is essential,” ProphetX Chief Executive and Co-Founder Dean Sisun said.
ProphetX said any Section 4(c) framework should preserve customer protections under federal commodities law while drawing clearer boundaries around the activities of technology vendors.
It also argued that clearer federal rules would give effect to the Commodity Exchange Act’s preemption of state gaming laws, an issue that has become more prominent as prediction markets expand their sports-related offerings.
The submission comes as regulators examine the role of technology providers that distribute access to event contracts without operating the underlying exchange.
Founded in 2018, ProphetX operates a sports-focused prediction market offering event-driven contracts. The company says it plans to expand into a wider range of event markets.
