Smarkets Pursues Dual CFTC and State Sportsbook Path in U.S
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- Smarkets filed for a Commodity Futures Trading Commission license in March and has pending sportsbook applications in Illinois, Iowa, and Michigan, with founder Jason Trost already operating as a sportsbook in Indiana.
- The Susquehanna-backed platform, founded in 2008 with over $60 billion in lifetime trading volume, is running in four European countries including Ireland, Malta, and Sweden.
- Trost said the dual-track strategy stems from unclear federal preemption: 'The reason we're doing the dual track is because the legal situation is unclear if the CFTC has federal preemption or not,' preferring to be regulated federally as a prediction market rather than state-by-state.
- 44 state attorneys general wrote last month that the CFTC cannot be the exclusive regulator of sports-related event contracts, while the CFTC has sued multiple states to block their regulation efforts — with Kalshi dismissing New York's July lawsuit as 'political theater.'
- DraftKings and FanDuel launched prediction markets late last year, with FanDuel parent Flutter noting on its earnings call that prediction market platforms can gain customers faster in states where sportsbooks face regulatory scrutiny.
- Trost took a shot at rivals, warning: 'Some of my competitors are in danger of ruining the reputation of this industry because I think they're acting irresponsibly [and] not following regulation closely enough.'
Why it matters: Smarkets' dual-track bet crystallizes a $60 billion-volume company's read on the regulatory chaos: it expects federal preemption to eventually win but is paying state compliance costs in the meantime. Competitors DraftKings and FanDuel have moved in reverse (sportsbook-first, prediction-market second), and Flutter's earnings call claim that prediction markets grow faster where sportsbooks are restricted gives Trost a market-structure rationale beyond pure legal hedging.
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