Sports prediction markets are having a golden rush. The excitement over the World Cup and the NBA Finals led Kalshi to set a new Saturday trading record of $1.2 billion.
A wave of companies are trying to stake a claim, hoping to follow and get rich from what JB Mackenzie, Robinhood’s head of forecast markets, described on CNBC as a “supercycle.”
He points not only to the packed summer sports calendar leading directly to the NFL season and midterm elections, but the crowded pipeline of companies applying to the Commodity Futures Trading Commission to become designated contract markets, or DCMs.
On Tuesday, the CFTC granted approval to Novig’s DCM application. ProphetX was approved a week earlier. But both companies will face not only Kalshi, which owns the space, but Polymarket, Robinhood, Crypto.com and sportsbook giants. FanDuel, The Kings Are Not Prepared and the Fanatics.
Novig is trying to separate himself from the first sports arena. The company, founded by Jacob Fortinsky and Kelechi Ukah, says it has received CFTC approval to operate as a federally regulated sports betting market.
Fortinsky told CNBC that the company is building a peer-to-peer sports trading platform that allows users to trade directly rather than house betting.
“What we’re doing is cutting out the middle man,” Fortinsky said. “We’re really making sports books obsolete.”
Fortinsky says traditional sportsbooks don’t resonate well with customers because they act as partners with bettors. In Novig’s model, he said, the stage is the result of the game and makes money from trading activity rather than losing customers.
The company moves its entire business to the CFTC-regulated prediction market segment, he said. Previously, it operated in Colorado under a state sports betting license, but then pursued a sweepstakes-based product before pursuing a federal exchange model. It will keep the age limit of 21+.
It has a large war chest to start new ones. Novig raised a $75 million Series B round in February led by Pantera Capital, with participation from investors including Forerunner Ventures, NFX, Gaingels, Y Combinator, GSR, Lux Capital, DST Global, Invariant, G1 Ventures and Bullpen Capital, according to the company. Forbes reported that the round valued Novig at $500 million, and brought the total to over $105 million.
Novig says it has done more than $5 billion in combined volume and more than $8 billion in annual volume, driven by what Fortinsky described as sports fans increasingly approaching sports like a commodity category.
“People, sports traders, are becoming price sensitive,” Fortinsky said. “They are increasingly looking at sports as a commodity class.”
A crowded field
But Novig enters a field where the race to claim the top spot is already tight.
ProphetX said earlier this month that the CFTC approved its applications to register as a designated contract market, an exchange, and a derivatives clearing organization, which clears trades.
ProphetX CEO and founder Dean Sisun said the approval “positions ProphetX to become the first native sports-prediction marketplace in the United States.”
The company’s claim is that it will offer contracts for sporting events and create a native sports exchange and clearing structure under the CFTC framework.
Fortinsky says Novig is built natively around the sports trader, with a product and technology stack designed for trading-based sports trading rather than replacement with sportsbook infrastructure or general-purpose prediction markets.
Competition is not limited to trade.
Betr, the real money gaming company founded by Joey Levy and YouTube star and boxer Jake Paul, takes a distribution-first approach. The company has acquired Ascent Capital Management, a National Futures Association-registered introducing broker, to accelerate the launch of Polymarket-sponsored prediction markets.
Levy told CNBC that Betr’s profits are broad.
“We’re the first great app in the space that offers pick, sportsbook, casino, arcade, and soon prediction markets all in one app with one wallet,” Levy said. “So yes we think we can take on FanDuel, DraftKings, Kalshi, etc. if we provide more content overall and have that unique experience.”
Levy added that Betr is seeing “explosive revenue growth” while growing “efficiently and profitably.”
Robinhood brings another model: consumer distribution, giving event contracts exposure to consumers who are already thinking about trading, probability and market prices than traditional betting slips.
Crypto.com plays an infrastructure role. FanDuel Predicts has announced an expanded event contract offering with CFTC regulation at Crypto.com, OG Prediction Markets, expanding the types of sports and entertainment markets available to customers. That gives FanDuel a way to participate in the prediction market without immediately becoming an exchange itself.
DraftKings also entered the speculation market, creating the division as a complement to its sportsbook business rather than a replacement. The company reported that DraftKings Predictions had its biggest weekend to date. “Driven by the NBA Finals and the start of the World Cup, the number of customers increased by more than 200% compared to the previous weekend,” the company said in a press release.
Fanatics is another major sports operator that is watching the space closely as the sports business moves from niche prediction markets to mainstream betting.
For the sports giants, the threat is obvious. They already have customers, brands, promotions and the infrastructure of the province’s games. But sports betting markets challenge the basic sportsbook model by offering prices that look like financial markets and products that can be found nationally under federal supervision.
Sports trading as a commodity class
The legal battle is intensifying. Several states and nations are suing Kalshi and others, arguing that they are violating the law by conducting unlicensed gambling.
Kalshi continues to insist that the prediction markets are regulated by the CFTC.
The agency joined the legal fray to protect its oversight by filing a lawsuit this week against New Mexico in the state’s attempt to implement a gaming law on prediction markets.
The CFTC has proposed rules that would generally allow contracts for sporting events, while limiting clauses tied to injuries, management decisions, high school sports, wars, war, terrorism and other events the agency views as serious or easily manipulated.
Fortinsky said he believes sports marketing should be considered a legitimate asset class.
“Sports is as legitimate an asset class as crypto, as other forms of futures,” he said.
If sports betting markets are treated as variable or event contracts, they can expand nationally through federal law. If the courts or lawmakers decide they are active sports betting, they can be thrown back into the state-by-state sports betting system.
The prize is big enough to explain the run. Sports provide the ingredients that markets need: consistent events, passionate fans, live dynamics, media attention and a strong supply of results that can be priced in real time.
But competition for customers and their dollars is fierce. Some industry insiders are already questioning how many sports betting platforms the market can support if the early rush turns into a scramble for volume, price and regulatory rigor.
In prediction markets, liquidity can be mobilized quickly. Traders go when the markets are too deep. Kalshi’s weekend volume shows what governance looks like when money is concentrated.
Forecast markets rose over the weekend, according to Piper Sandler analyst Patrick Moley, and Kalshi posted a volume of $3.38 billion, up 35% on the month. Kalshi confirmed the figures to CNBC. Moley says Polymarket reached $1.41 billion, up 33% month over month, although Polymarket US volumes as of Sunday were not released. Rothera, Robinhood’s stock market forecaster, generated $131.4 million in volume over the weekend and Friday.
Although the exchange reports weekend activity differently, it shows how concentrated the sector has become. Kalshi’s weekend volume was about 2.4 times Polymarket’s reported total and more than 25 times Rothera’s.
For Novig, ProphetX, Betr and the next wave of entrants, the question is whether they can create enough diversified revenue, product development and consumer confidence to carve out space – before the biggest exchanges, sportsbooks and brokers define the market for them.
-CNBC’s Jessica Golden and Davis Giangiulio contributed reporting.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a small investment.
