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UK prediction market operator Smarkets is pursuing two regulatory routes into the United States, positioning its exchange under federal derivatives oversight while keeping its sportsbook business within the traditional state licensing system.
The approach comes as the regulatory divide between Washington and US states widens. A bipartisan coalition of 44 state attorneys general recently told the Commodity Futures Trading Commission that it lacks authority to effectively override state regulation of sports-related prediction markets.
That dispute is central to Smarkets’ US strategy because rivals including Kalshi and Polymarket have largely built their domestic expansion around the argument that federally regulated event contracts fall under the CFTC rather than state gambling authorities.
Smarkets filed an application for Designated Contract Market status on March 3, according to the CFTC’s official database. As of the regulator’s latest listing, Smarkets Board of Trade Exchange LLC, also operating as Smarkets Exchange, remains classified as pending.
When announcing the filing, Smarkets described its US plan as two parallel regulatory tracks: CFTC oversight for its core exchange and state-by-state sportsbook licensing for SBK, its sportsbook-style product.
The distinction matters. Smarkets operates an exchange where participants trade against each other, while SBK presents prices generated from that infrastructure through a more conventional sportsbook interface. The company reports roughly $50 billion in lifetime traded volume and about $3 billion annually. Susquehanna led its $30 million Series B funding round.
Maintaining both routes could give Smarkets flexibility if courts ultimately restrict the federal model for sports contracts.
The legal risk has grown significantly since Smarkets filed its application.
On July 29, attorneys general from 44 states challenged the CFTC’s proposed event-contract framework, arguing that sports prediction markets resemble conventional sports wagering and remain subject to state authority.
The coalition expanded from an earlier group of 41 attorneys general that made a similar argument in April. Those officials said users can effectively make many of the same wagers available through sportsbooks, including bets on winners, spreads and player statistics, without necessarily operating under equivalent state gambling protections.
The CFTC, meanwhile, proposed a new framework in June for evaluating event contracts involving activities listed in the Commodity Exchange Act, including gaming. The proposal would establish a 90-day review process and assess contracts individually against public-interest factors.
Courts have yet to settle the federal-versus-state question.
A federal judge recently blocked Minnesota’s prediction market ban while litigation continues, siding preliminarily with the CFTC, Kalshi and Polymarket on federal jurisdiction.
New York produced the opposite result in July, when a federal judge rejected Kalshi’s attempt to stop the state from enforcing gambling laws against its sports contracts. Kalshi has appealed.
For Smarkets, those conflicting rulings make its dual approach more than a licensing detail. If the CFTC model survives broad state challenges, Smarkets could operate through a federally regulated exchange. If states retain significant authority over sports contracts, SBK’s state licensing route provides a separate path into the same US market.
That regulatory optionality may become increasingly valuable as prediction markets await a clearer answer on where derivatives regulation ends and sports betting law begins.
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