Sporttrade, the Camden, New Jersey-based sports trading exchange, has formally applied for Designated Contract Market (DCM) status with the Commodity Futures Trading Commission, a move that could position it as the first company ever to hold both state gaming licenses and federal exchange registration simultaneously.
Sporttrade’s CFTC filing has a date of January 27 and includes applications for both DCM and Derivatives Clearing Organization (DCO) status. The filing caps a tumultuous year for founder and CEO Alex Kane, who has been among the industry’s most vocal critics of the fragmented U.S. sports betting regulatory landscape.
“Today marks the opening of an incredibly exciting chapter of the Sporttrade journey, one that facilitates a return to our original vision,” Kane said in a statement in the Feb. 4 press release about the filing, which was first reported by Sportico.
Asked what the filing means for the future of Sporttrade, Kane told DeFi Rate: “Pursuing federal registration as a DCO and DCM allows us to put the consumer first in ways we have not yet been able to do: onboard more market makers, permit individuals to trade via an API, and most critically, support brokers with our already-established technology platform. All of these factors contribute to decreasing spreads and lowering costs. None of these things were realistically permissible under state regulation.”
A $50 dollar bet on the wrong regulatory horse?
Sporttrade’s journey to this filing represents one of the prediction market industry’s most instructive cautionary tales about regulatory timing and strategy.
Founded in 2018 by Kane, a former retail trader turned fintech entrepreneur, Sporttrade was built from the ground up as a financial exchange for sports outcomes. The company raised capital from prominent electronic market makers including Jump Capital, Nasdaq, DL Trading, Chicago Trading Company, and Tower Research. It built its matching engine using architecture similar to the Island ECN that powered registered U.S. equity exchanges, and became the first regulated sports betting platform to integrate Nasdaq’s market surveillance technology.
But in 2020, facing a CFTC that had just blocked ErisX‘s attempt to self-certify NFL contracts, Kane made what he now acknowledges was a fateful decision: pursue state gaming licenses rather than federal registration.
“We made a decision that, at the time, the event contracts we would list involved gaming and as such, we would need to be regulated as a sports betting operator,” Kane wrote in an April 2025 letter to the CFTC. “We did not see any other way of bringing our product to market, and this was confirmed by every state gaming regulator that we spoke with.”
Kane told the CFTC the company has invested upwards of $50 million navigating state-by-state licensing requirements, ultimately launching in just five states: New Jersey, Colorado, Iowa, Arizona, and Virginia.
So, what will Sporttrade do with its state licenses upon receiving DCM approval?
“We have not yet made a decision with regards to state licenses that we are sharing publicly,” Kane told DeFi Rate. “What I can say is that we have spent tens of millions of dollars, and years of time to create personal relationships with state regulators. While we have been disappointed to not have been yet able to offer all the features of our platform as we initially envisioned under the state model, we know that the prescriptive rules are set by state legislatures, not regulators.”
The federal floodgates open
When Kalshi won its landmark legal battle against the CFTC in September 2024 over political event contracts, it set in motion a chain of events that would fundamentally reshape the competitive landscape. Under the Trump administration, the CFTC adopted a far more permissive stance toward event contracts, with Crypto.com self-certifying sports contracts in December 2024 and Kalshi following in January 2025.
Suddenly, Sporttrade’s competitors were offering effectively identical products — exchange-traded sports contracts — in all 50 states, while Kane’s platform remained geographically constrained by its state licenses.
“It’s really hurt the business,” Kane told Sportico in a recent interview. “We’re entering the boxing ring with one hand tied behind our back.”
The competitive disparity extends beyond mere geography. Under state gaming regulations, Sporttrade cannot utilize third-party brokers to expand its user reach. This represents a a critical limitation when at least half of Kalshi’s volume now flows through brokerage apps like Robinhood and Webull.
“We’re kind of caught in the slow lane,” Kane said. “That’s pinned our business down from a traction and revenue perspective, to the point where the CFTC thing is the highest priority for the company in order for it to grow.”
With CFTC approval as a DCM, Sporttrade will be able to partner with brokerages.
Kane’s year-long campaign
The DCM filing represents the culmination of nearly a year of public advocacy by Kane, who has become something of an industry gadfly — simultaneously defending the exchange model while criticizing both state gaming frameworks and the companies exploiting federal loopholes.
In March 2025, Kane published an open letter to U.S. sports betting regulators and legislators speaking candidly about the industry’s structural problems.
“I’ve simply lost count of the number of conversations I’ve had with players where they’ve compared Sporttrade to other ‘books’ such as Bovada, Pinnacle, Polymarket, Fliff, PrizePicks, ProphetX, Novig, Kalshi,” Kane wrote. “To the player, there are no ‘unregulated options’ versus ‘regulated options’. There are simply ‘options.'”
Kane has also been notably honest about the nature of his product in ways that distinguish Sporttrade from competitors. While Kalshi has consistently characterized its sports contracts as financial instruments distinct from gambling, Kane has taken a different tact, acknowledging the similarities while also educating about important nuances.
Kane has advocated for a “prediction market license category” within state sports betting regulations “that allows innovators to bring revenue into their market,” but to no avail.
In April 2025, Sporttrade formally approached the CFTC requesting no-action relief that would have allowed it to operate under federal oversight without completing the full application process. That request was never granted, forcing the company to take its place in line alongside at least eight other pending DCM applicants.
A lot has happened between April and now. Considering the time between Sporttrade’s April letter requesting no-action relief and actually filing for DCM status, we asked Kane about any strategic considerations in the application timing like changes in CFTC leadership.
“The leadership transition is a factor,” Kane said. “But we also wanted to submit all applications, not just for a disintermediated DCM (easiest filing), but for a disintermediated and intermediated DCM, and DCO (much harder).”
The path forward
Sporttrade’s application enters a CFTC that has signaled strong support for prediction market innovation. New Chairman Michael Selig, who took office in December 2025, has directed staff to withdraw the 2024 rule proposal that would have prohibited political and sports-related event contracts, and to begin drafting new event contracts rulemaking.
“It is time for clear rules and a clear understanding that the CFTC supports lawful innovation in these markets,” Selig said in a recent speech outlining the agency’s 2026 priorities.
The timing may finally be working in Sporttrade’s favor. The company submitted its exchange application in December 2025 before turning to its clearinghouse application, and has met with CFTC officials multiple times, including in-person sessions at the agency’s Washington headquarters.
That said, the typical DCM approval process takes 12-18 months, though it may be speeding up with the shifting CFTC priorities. Kane told DeFi Rate they anticipate approval “before football season.”
Industry implications
Sporttrade’s filing may signal a broader shift in how established gaming companies approach the prediction market opportunity. The potential for dual federal-state licensing also raises novel questions about regulatory coordination. If approved, Sporttrade would maintain its existing state gaming licenses while operating under CFTC oversight — a structure no other company has attempted.
For Kane, who built a financial technology company only to spend years adapting it to gaming regulations, the DCM filing represents something of a homecoming.
“We had originally constructed our venue under the assumption that the sports trading vertical would follow the trajectory of most other electronic markets, one towards efficiency and transparency powered by broker intermediation and institutional participation,” Kane said in the press release. “Federal registration will thus allow us to finally unlock the full potential of our natively-built exchange, clearing, and broker technology in our pursuit to always put the customer first.”
If timeline expectations play out, Sporttrade could be serving sports traders in all 50 states for the 2026 NFL and college football seasons.
