Federal approval sought by Sporttrade to broaden sports betting exchange operations

Federal approval sought by Sporttrade to broaden sports betting exchange operations

Philadelphia-based Sporttrade is pushing for a national expansion of its sports betting exchange model, seeking approval from the U.S. Commodity Futures Trading Commission (CFTC). CEO Alex Kane, in a formal request dated April 25, stressed the urgency due to potential "irreparable harm" if denied.

At present, Sporttrade operates in five states (Arizona, Colorado, Iowa, New Jersey, and Virginia) with state licenses. However, operating under state-by-state regulations while competitors steer clear of state licensing and operate under federal rules puts the company at a significant disadvantage.

Kane acknowledges that Sporttrade is engaged in sports betting but insists it follows gaming rules. Meanwhile, competitors like Kalshi are operating under the CFTC and do not label their offerings as sports betting, allowing them to avoid state licensing. However, this approach has stirred controversy, with states like New Jersey and Nevada suing Kalshi.

In contrast, Kalshi co-founder Tarek Mansour asserts that the CFTC is their regulator, and they will comply if told to stop. Nevertheless, this stance has created a predicament for Sporttrade, which is navigating a complex regulatory landscape.

To ensure compliance with CFTC standards without being blocked during the decision-making process, Sporttrade plans to submit a no-action relief request outlining its operational plans. If approved, Sporttrade could become the first sports-only derivatives platform to comply with both state and federal regulations.

Notably, other sportsbook operators like Rush Street Interactive are keeping an eye on the situation, potentially considering a move into federally regulated prediction markets if the rules shift. Due to the CFTC's recent cancellation of a roundtable on event contracts meant to bring clarity, both Sporttrade and Kalshi find themselves in a murky legal situation.

[1] Sporttrade Asks CFTC for Approval to Operate Sports Betting Exchange Nationally - Covers (April 27, 2025)[2] Sporttrade pushes for CFTC approval to compete with Kalshi and others - Yahoo Finance (April 28, 2025)[3] Kalshi vs. Sporttrade: The Sports Betting Derivatives Battle - Sports Handle (May 03, 2025)[4] CFTC Cancels Roundtable on Event Contracts - The Hill (May 10, 2025)[5] The Regulatory Landscape for Sports Betting Derivatives: Sporttrade and Kalshi - Gambling Compliance (May 15, 2025)

1. Sporttrade has requested approval from the U.S. Commodity Futures Trading Commission (CFTC) to operate its sports betting exchange model nationally, aiming to level the playing field with competitors who operate under federal rules.
2. In a bid to ensure compliance with CFTC standards, Sporttrade plans to submit a no-action relief request, outlining its operational plans, with the potential to become the first sports-only derivatives platform to navigate both state and federal regulations.
3. As the regulatory landscape for sports betting derivatives becomes increasingly complex, other sportsbook operators like Rush Street Interactive are closely monitoring the situation, considering a move into federally regulated prediction markets if the rules shift.
4. The CFTC's recent cancellation of a roundtable on event contracts has led to a murky legal situation for both Sporttrade and its competitor, Kalshi, leaving the future of these sports betting derivatives platforms uncertain.

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