Prediction markets and sports betting: How this UK exchange is trying to do both in the U.S.

Lifetime Trading Volume

$60 billion

Total trading volume processed by Smarkets since its inception.

States for Sportsbook Applications

Smarkets has pending applications to operate as a sportsbook in Illinois, Iowa, and Michigan.

States of Operation

Smarkets currently operates in four European countries, including Ireland, Malta, and Sweden.

§ 01 Executive Snapshot

What: Smarkets, a UK-based betting exchange, is expanding into the U.S. by pursuing both prediction markets and sportsbook operations.
Who: Smarkets, Commodity Futures Trading Commission (CFTC), state regulators, and competitors like Kalshi and FanDuel.
Why it matters: The dual approach reflects ongoing regulatory uncertainties surrounding prediction markets and sports betting in various states.

Smarkets filed for a license with the CFTC in March 2023 to operate as a prediction market exchange.
The platform has over $60 billion in lifetime trading volume, indicating significant user engagement.
Smarkets has pending applications to operate as a sportsbook in Illinois, Iowa, and Michigan, while already functioning in Indiana.

The legal landscape for prediction markets and sports betting in the U.S. is evolving, with states contesting the federal jurisdiction of the CFTC.
Smarkets is following a trend where other sports betting platforms, like DraftKings and FanDuel, are also launching prediction markets to leverage regulatory opportunities.

The immediate consequence of Smarkets' approach is the potential to establish a strong foothold in the U.S. market amidst regulatory challenges.
Long-term, Smarkets aims to position itself as a compliant and responsible operator, which could enhance its reputation and attract users wary of unregulated platforms.

Regulatory uncertainty presents a major risk, as various states argue that prediction markets may be illegal gambling platforms.
High compliance and tax costs associated with operating in different states could impact profitability and operational scalability.

Key milestones include the outcome of Smarkets' applications for sportsbook licenses in Illinois, Iowa, and Michigan.
Future legal developments regarding the CFTC's jurisdiction over prediction markets will be crucial in shaping Smarkets' operational strategy.

§ 07

What is Smarkets planning to do in the U.S.?

Smarkets is expanding into the U.S. by pursuing both prediction markets and sportsbook operations.

Why is Smarkets' dual approach significant?

The dual approach reflects ongoing regulatory uncertainties surrounding prediction markets and sports betting in various states.

How much trading volume has Smarkets achieved?

Smarkets has over $60 billion in lifetime trading volume, indicating significant user engagement.

When did Smarkets file for a license with the CFTC?

Smarkets filed for a license with the CFTC in March 2023 to operate as a prediction market exchange.