Until recently, the federally regulated prediction market industry largely revolved around a single exchange. For several years, Kalshi operated as the only active Commodity Futures Trading Commission-approved platform offering event contracts to U.S. retail traders. That landscape is now shifting rapidly.
Since the start of 2025, 20 new Designated Contract Market filings or designations have appeared in the CFTC registry as companies seek licenses to operate regulated event contract markets in the United States. At the same time, consumer trading platforms and financial firms are exploring multiple paths into prediction markets, from acquiring exchange infrastructure to building brokerage and distribution layers around existing exchanges.
The result is a race not just to launch prediction market sites, but to control the infrastructure that powers them.
The regulatory stack behind prediction markets
The rise of CFTC-regulated prediction markets is happening within a regulatory framework designed for derivatives trading. Understanding how these markets function requires understanding the three core entities that make up that structure.
At the center is the Designated Contract Market. A DCM functions as the exchange itself. It lists contracts, operates the order book where buyers and sellers trade, and enforces market integrity rules under the Commodity Exchange Act. Any U.S. prediction market exchange offering federally regulated event contracts must ultimately operate through a registered DCM.
Futures Commission Merchants (FCMs) act as the brokerage layer between traders and regulated exchanges. They maintain customer accounts, safeguard customer funds, manage margin requirements, and route orders to an exchange. FCMs are registered with the CFTC and supervised by the National Futures Association.
Finally, trades are typically cleared through a Derivatives Clearing Organization (DCO), the clearinghouse that processes and guarantees trades after they are executed. The DCO becomes the central counterparty to each transaction, standing between buyer and seller and ensuring contracts settle even if one side defaults.
Some companies operate only one layer of this stack, while others aim to control multiple parts of it or the entire structure. Those structural choices increasingly shape how firms compete in prediction markets. As new DCM applications surge, the licenses themselves are becoming strategic assets and potential acquisition targets for companies seeking a regulated foothold in the market.
A pipeline under construction
The growing pipeline of exchange filings shows how quickly the regulated prediction market sector is expanding.
Since the start of 2025, 20 new DCM filings or approvals have appeared in the CFTC’s registry, reflecting a rapid expansion of companies seeking approval to operate regulated exchanges. Seven exchanges have already been designated, while the other 13 are listed as pending as the agency conducts its review.
The increase in filings has also coincided with a more accommodating federal regulatory posture toward event contracts. Kalshi’s September 2024 court victory allowing its election markets weakened the CFTC’s ability to block similar contracts. Under President Donald Trump’s second administration, CFTC Chair Mike Selig later directed the agency to withdraw a proposed rule banning sports and political event contracts and initiated a rulemaking process to clarify how prediction markets should be regulated.
Not every DCM filing is aimed specifically at prediction markets. Some applicants appear to be pursuing broader derivatives exchanges that could list traditional futures or options contracts. Still, most of the new filings since 2025 have been tied to companies explicitly seeking to build regulated event contract exchanges.
Acquisition and other strategies to get to market
Several newly approved DCMs quickly became acquisition targets for larger trading platforms.
QCX, designated in July 2025, was acquired by Polymarket in October 2025 as part of its effort to launch a regulated U.S. exchange. Railbird Exchange, approved in June 2025, was purchased by DraftKings in October 2025 as the sportsbook operator moved to secure its own exchange infrastructure. Aristotle Exchange, designated in September 2025, was acquired by Underdog in March 2026.
Some of those acquisitions also included clearing infrastructure. Both QCX and Aristotle held approvals not only as DCMs but also as DCOs, giving their buyers control over both the exchange and clearing layers.
The acquisition deals suggest that exchange licenses themselves are becoming valuable entry points into the market. For companies seeking a foothold in regulated event contracts, acquiring a DCM may prove faster than building one from scratch and going through the sometimes lengthy approval process.
Several other DCM applicants are now moving through the approval pipeline. Sporttrade, Ludlow Exchange (Novig’s proposed DCM entity) and Smarkets are each pursuing exchange-style event trading platforms built around sports markets but capable of listing other event contracts. XV Exchange is developing a similar platform built on technology from the STX sports exchange, while DimeTrades plans to launch in 2026 and offer sports and other market types.
Other filings point to different models. PMEX Markets, the exchange entity for Pluto, is seeking approval to launch event contract trading tied to AI infrastructure. tZERO, a digital-asset trading platform with roots in crypto market infrastructure, has also filed for DCM status as it explores how event contracts might fit within a broader derivatives offering.
Active (Designated) Exchanges
| Operator / Exchange | Licenses | Status | Consumer Interface | FCM / Distribution Partners | Other Key Partners / Notes |
|---|---|---|---|---|---|
| KalshiEX | DCM, DCO | Designated Nov. 2020 | kalshi.com | Robinhood Derivatives, Coinbase Financial Markets, WeBull, PrizePicks, Sleeper | CF Benchmarks (crypto settlement); SIG (Series E investor); hub-and-spoke distribution model |
| QCX / Polymarket US | DCM, DCO | Designated July 2025; acquired by Polymarket Oct 2025 | polymarket.com (US) | PrizePicks (contracted, not active yet) | ICE/NYSE ($2B investor); Dome/unified API (acquired); Yahoo Finance (data) |
| CDNA (Crypto.com Derivatives North America) | DCM, DCO, FCM | HedgeStreet designated 2004; acquired by Crypto.com in 2022 | OG app; Crypto.com app | Fanatics Markets (*introducing broker); DraftKings Predictions (introducing broker); Underdog** (FCM) | Trump Media’s Truth Predict, Hollywood.com (white-label clients) |
| CME Group | DCM, DCO | Prediction markets launched Dec 2025 | Via FCMs | FanDuel Predicts app (FCM and co-owned brokerage with CME); DraftKings Predictions app (***introducing broker via Gus III LLC IB / Wedbush FCM) | N/A |
| MIAXdx (Robinhood / SIG JV) | DCM, DCO, SEF | Acquired Jan. 2026 (now called Rothera); event contract listing expected 2026 | Robinhood app (transition in progress) | Robinhood Derivatives (FCM); open to other FCMs | SIG (JV co-owner); MIAX retains 10% equity stake |
| Railbird Exchange (DraftKings) | DCM | Designated June 2025; acquired by DraftKings Oct. 2025 | DraftKings Predictions / TBD | DraftKings (parent) | In-house exchange buildout |
| Aristotle Exchange (Underdog) | DCM, DCO | Designated Sept. 2025; acquired by Underdog Jan. 2026 | Underdog platform | Underdog (parent) | Underdog markets currently distributed via CDNA; acquisition brings clearing infrastructure in-house |
| Gemini Titan | DCM | Designated Dec. 2025 | gemini.com | N/A | Winklevoss Capital; integrated with Gemini crypto exchange; five-year licensing process |
| Xchange Alpha | DCM | Designated Jan. 2026; targeting late summer 2026 launch | FCM-routed only; no direct retail interface | TBD | MIAX Futures Exchange (clearing partner); CRO Bella Rozenberg (former CFTC) |
| Electron Exchange | DCM, DCO | Designated Aug 2025 | Not publicly disclosed | Not publicly disclosed | Limited public details available |
| Quanta Exchange | DCM | Designated May 2025 | Not publicly disclosed | Not publicly disclosed | Limited public details available |
| ForecastEx | DCM, DCO | Designated June 2024 | forecastex.com; IBKR ForecastTrader (Interactive Brokers) | Interactive Brokers (parent; FCM) | Lumina (reported backing); yield on open positions; targets institutional / corporate treasury segment |
*An Introducing Broker (IB) introduces customer orders but does not hold customer funds, a meaningful regulatory distinction. Fanatics acquired Paragon in July 2025 specifically to obtain the IB registration. Paragon Global Markets, LLC, d/b/a Fanatics Markets IB, is registered with the CFTC as an Introducing Broker.
**Underdog acquired Aristotle Exchange (its own DCM/DCO) in March 2026, so it’s actively moving away from CDNA as an exchange partner.
***DraftKings (via Gus III LLC) is the IB that takes the customer’s order; Wedbush Securities is a third-party FCM that DraftKings routes through (which actually holds the customer’s money and handles clearing).
An additional exchange, PredictIt, deserves a mention here. While not technically a DCM, the academic-focused political markets platform owned by Victoria Univ. of Wellington operates under a CFTC no-action letter. The site got full approval in Sept. 2025 after a July 2025 legal victory, including increased maximum position limits of $3,500.
Pending prediction market exchange applicants
| Operator / Exchange | Licenses Sought | Filed | Consumer Interface (Planned) | Notes |
|---|---|---|---|---|
| XV Exchange | DCM, DCO | Dec 2025 | Standalone U.S. platform | Affiliated with STX (Canadian sports exchange); CEO Justin Deutsch; vertically integrated model; sports and broader event contracts |
| tZERO | DCM, DCO | Nov 2025 | tZERO platform | CEO Alan Konevsky; tokenized securities background; derivatives including prediction markets, futures, and options |
| Smarkets Board of Trade Exchange | DCM, DCO | March 2026 | U.S. platform | Smarkets UK parent (~$3B annual volume); backed by SIG; CEO Jason Trost; peer-to-peer CLOB model |
| PMEX Markets (Pluto) | DCM | Feb 2026 | Pluto platform | Event contracts tied to AI infrastructure |
| Sporttrade | DCM | Jan 2026 | Sporttrade platform | Exchange-style sports model; no house edge |
| Ludlow Exchange (Novig) | DCM | Jan 2026 | Novig platform | Affiliated with Novig sports exchange |
| Water Street Labs | DCM | Jan 2026 | Not publicly disclosed | Limited public details available |
| Optex Markets | DCM | Jan 2026 | Not publicly disclosed | Limited public details available |
| ProphetX | DCM | Nov 2025 | ProphetX | Peer-to-peer exchange interface with CLOB + RFQ execution |
| RSBIX | DCM | Sept 2025 | Not publicly disclosed | Partnered with UK-based exchange Matchbook |
| OneChronos Markets | DCM | July 2025 | Not publicly disclosed | Limited public details available |
| Juice Exchange | DCM | Jan 2026 | Not publicly disclosed | Limited public details available |
| DimeTrades (PredictCraft Mkt Inc.) | DCM | Feb 2026 | DimeTrades platform | Founders Alan Galicot, Alexander Galicot, Joshua Nachassi; QC Clearing LLC (Polymarket’s QCEX clearing arm) designated as clearing partner |
Three operating models emerging in event contract trading
As the number of licensed exchanges grows, companies entering the prediction market space are increasingly clustering around three operating structures. Each reflects a different approach to building and controlling the infrastructure behind a prediction market exchange.
Hub-and-spoke distribution
One model centers on a single exchange that distributes its markets through outside platforms.
Kalshi is the clearest example. The company operates the exchange and clearing infrastructure while partner platforms connect their own users to its order book. Firms including Robinhood, Coinbase, Webull, and PrizePicks have routed customer trades to Kalshi’s markets in this manner.
The advantage of this model is scale. A single exchange can expand its reach by connecting to multiple retail platforms, allowing it to access large user bases without relying solely on its own consumer platform. For the partners, the arrangement provides a fast way to add an event contract exchange product.
The risk is that successful distribution partners could eventually decide to build or acquire their own exchanges, allowing them to internalize trading activity that previously flowed to the exchange.
White-label infrastructure
A second approach relies on what is often described as a white-label model. In this structure, a regulated exchange operates the trading and regulatory infrastructure while consumer brands distribute those markets through their own platforms. Unlike the hub-and-spoke model, where multiple brokers route orders to a single exchange, the white-label structure places the exchange largely behind the scenes while different companies present the markets through their own branded interfaces.
One example is Crypto.com Derivatives North America (CDNA). The company currently operates the only platform with the complete regulatory stack, holding registrations for a DCM, DCO, and FCM. That structure allows CDNA to provide the exchange, clearing and brokerage infrastructure behind event-contract trading. Platforms including Fanatics Markets, Trump Media’s Truth Predict, and Hollywood.com distribute (or are planning to distribute) markets powered by CDNA’s exchange infrastructure, while Crypto.com’s own trading platform offers the same contracts. DraftKings Predictions added CDNA markets in February 2026 to supplement its CME Group offering. Underdog, which launched prediction markets in September 2025, also routes through CDNA, but its acquisition of Aristotle Exchange in March 2026 gives it its own exchange infrastructure.
Both DraftKings and FanDuel Predicts offer contracts from CME Group. While FanDuel Predicts is an FCM, it took a different path by embarking on a joint venture with CME, not just an FCM-DCM relationship. Unlike DraftKings, FanDuel has not acquired its own DCM.
The advantage of the white-label structure is that the infrastructure provider can earn revenue on every contract traded across multiple consumer platforms, regardless of which brand attracts the user. By powering the exchange, clearing and brokerage layers behind the scenes, the operator participates in trading activity across all of the platforms distributing its markets.
The challenge is that those partners still control the customer relationship. If a successful platform later acquires its own exchange infrastructure, it may migrate trading activity onto its own exchange rather than routing it through a partner.
Vertical integration through acquisition
A third strategy involves consumer trading platforms acquiring their own exchange infrastructure rather than relying on outside providers. Robinhood’s purchase of MIAXdx with Susquehanna International Group in January illustrates this approach. By owning the exchange layer directly, Robinhood can move beyond acting solely as a distribution platform and operate the marketplace where contracts are listed and traded.
Like the Underdog/Aristotle, Polymarket/QCX, and DraftKings/Railbird deals mentioned previously, the move reflects a push by consumer platforms to bring exchange infrastructure in-house rather than depend on external partners.
The advantage of this model is control. Owning the exchange infrastructure allows companies to keep fees that would otherwise flow to a partner and to introduce new contracts more quickly. The tradeoff is complexity. Operating a regulated derivatives exchange introduces compliance, surveillance, and clearing responsibilities that add significant regulatory and operational demands.
Why FCMs hold leverage in prediction markets
Exchange licenses determine where contracts are listed, but the brokerage layer often determines where trading activity ultimately flows. In prediction markets that position is usually held by FCMs, the firms that maintain customer accounts and route orders to exchanges. Because every trade passes through that brokerage relationship, FCMs participate in the revenue generated regardless of which exchange ultimately lists the contract.
Robinhood illustrates how powerful that position can be. The company entered prediction markets purely as an FCM, routing customer orders to outside exchanges like Kalshi. According to company disclosures, Robinhood users traded more than 12 billion event contracts in 2025 and another 5.8 billion contracts in the first two months of 2026, making prediction markets one of the platform’s fastest-growing segments. That scale underscores how quickly trading activity can accumulate at the brokerage layer when attached to a large retail platform.
Other companies are positioning themselves around the same brokerage layer. Coinbase, for example, currently distributes prediction markets by routing customer orders to Kalshi, allowing it to participate in the trading flow without operating its own exchange.
“Fanatics took a different approach, acquiring Paragon Global Markets to power the brokerage layer behind Fanatics Markets. In that structure, Paragon, registered as an Introducing Broker rather than a full FCM, refers customer orders to CDNA, which operates the underlying exchange and clearing infrastructure. Introducing Brokers occupy a similar position to FCMs in the distribution chain, connecting users to exchanges, but with one key difference: they do not hold customer funds. That responsibility falls to the exchange or a separate clearing FCM.
DraftKings currently follows the same model in its offering of CME and CDNA markets. It operates through its subsidiary Gus III LLC as a registered Introducing Broker, with customer funds held by third-party FCM Wedbush Securities. For consumer brands entering prediction markets, the IB structure offers a faster, lower-complexity path to market than standing up a full FCM — at the cost of ceding some control over the customer relationship.
In a market where multiple exchanges may compete for order flow, the brokerage layer often determines where that trading activity, and the revenue tied to it, ultimately lands.
What the infrastructure race means for traders
For traders, the expanding exchange landscape will likely bring both benefits and growing pains. As more DCMs compete for order flow, fees and spreads tend to narrow, improving pricing and access across platforms.
At the same time, the rapid growth of new venues, combined with the move toward vertically integrated platforms, could leave liquidity more fragmented in the near term. Platforms that once routed trades to shared exchanges may increasingly direct activity to their own order books, forcing traders to navigate multiple venues to find the best prices.
Over time, that competition may strengthen the sector. The arrival of established exchanges and institutional trading firms could deepen liquidity and improve price discovery, but it may also reduce pricing inefficiencies some retail traders rely on. During this transition, however, traders should expect a more complex and competitive trading environment.
