Novig wins CFTC approval as competition intensifies in sports prediction markets
Sports prediction markets are experiencing a gold rush. The enthusiasm for the World Cup and NBA finals caused Kalshi to set a new daily record with a trading volume of $1.2 billion on Saturday.
A group of companies are trying to make a claim by following suit, hoping to get rich off JB Mackenzie’s actions. RobinhoodThe head of prediction markets described it as a “super cycle” to CNBC.
It points not only to a packed sports summer schedule leading directly to the NFL season and midterm elections, but also to a tight line of companies applying to the Commodity Futures Trading Commission to become designated contract markets, or DCMs.
On Tuesday, the CFTC approved Novig’s DCM application. ProphetX’s was approved a week ago. But both companies will be going up against not only Kalshi, which dominates the space, but also Polymarket, Robinhood, Crypto.com and sports betting giants. FanDuel, DraftKings and Fanatics.
Novig is trying to differentiate itself with a field that prioritizes sports. The company, founded by Jacob Fortinsky and Kelechi Ukah, announced that it has received CFTC approval to operate as a sports-focused, federally regulated prediction marketplace.
Fortinsky told CNBC that the company is building a peer-to-peer sports trading platform that allows users to trade directly against each other rather than betting against the house.
“What we’re doing is basically shutting out the middle man,” Fortinsky said. “We are truly making sports betting sites obsolete.”
Fortinsky argues that traditional sports betting sites are structurally incompatible with customers because they act as counterparties to bets. He said that in Novig’s model, the platform does not depend on the outcome of the game and makes money from trading activities rather than customer losses.
He said the company is moving its entire business into the prediction market category regulated by the CFTC. It previously operated in Colorado under a state sports betting license, but later pivoted to a sweepstakes-based product before following the federal exchange model. The age limit of 21+ will be maintained.
It has a big war chest for a young startup. Novig grew up $75 million Series B According to the company, it was launched in February under the leadership of Pantera Capital, with participation from investors such as Forerunner Ventures, NFX, Multicoin Capital, Makers Fund and others. Forbes reported Novig’s valuation at $500 million, bringing total capital to over $105 million.
Novig says Fortinsky has generated more than $5 billion in cumulative volume and more than $8 billion in annual volume, driven by what he describes as sports fans increasingly treating games like a tradable asset class.
“People, the sports traders, are becoming more price sensitive,” Fortinsky said. “They are increasingly looking at sports as an asset class.”
A crowded area
But Novig enters a field where the race to claim first mover status is already crowded.
ProphetX said earlier this month that the CFTC had approved its applications to register as both a designated contracts market, which is an exchange, and a derivatives clearing organization that clears trades.
ProphetX CEO and co-founder Dean Sisun said the approval “will make ProphetX the first sports domestic direct exchange prediction marketplace in the United States.”
The company’s claim is that it will offer sports event contracts and create a sports-specific exchange and clearing structure under the CFTC framework.
Fortinsky argues that Novig is built natively around the sports trader, with a product and technology stack designed for exchange-based sports trading, rather than adapted from sports betting infrastructure or general-purpose prediction markets.
The competition is not limited to just trades.
Betr, the real-money gaming company founded by Joey Levy and YouTube star and boxer Jake Paul, takes a distribution-first approach. The company acquired Ascent Capital Management, a National Futures Association-registered promotional broker, to accelerate the launch of prediction markets powered by Polymarket.
Levy told CNBC that Betr’s advantage is breadth.
“We are the first super app in the space to offer Predictions, Sports betting, casino, arcade and soon prediction markets all in one app with a single wallet,” said Levy. “So yes, we think we can take on FanDuel, DraftKings, Kalshi, etc. because we offer more content overall and have a different experience.”
Levy added that Betr has seen “explosive revenue growth” while growing “efficiently and profitably.”
Robinhood introduces another model: brokerage distribution, which ensures that event contracts are offered to consumers who already think in terms of trades, odds and market prices, rather than traditional betting slips.
Crypto.com plays an infrastructure role. FanDuel Predicts announced an expanded event contract offering that expands the types of sports and entertainment markets available to customers through Crypto.com’s CFTC-regulated exchange and clearinghouse OG Prediction Markets. This gives FanDuel a way to participate in prediction markets without immediately becoming an exchange.
DraftKings has also moved into prediction markets, framing the category as a complement rather than a replacement for its sports betting business. DraftKings Predictions had its biggest weekend ever, the company reported. “Driven by the start of the NBA Finals and the World Cup, total customer count increased over 200% compared to the previous weekend,” the company said in a news release.
Fanatics is another major sports betting operator that is watching the space closely as sports trading moves from niche prediction markets to mainstream betting behavior.
The threat to sports betting giants is clear. They already have customers, brands, promotions and state-by-state gaming infrastructure. But sports prediction markets are challenging the basic sports betting model by offering prices more like financial markets and products available nationally under federal oversight.
Sports trading as an asset class
The legal struggle is intensifying. Several states and tribes are suing Kalshi and others, claiming they broke the law by facilitating unlicensed gambling.
Kalshi continues to insist that prediction markets are regulated by the CFTC.
Agency joins legal fight to defend federal oversight I will be filing a lawsuit against New Mexico this week. in an attempt to apply the state’s gaming law to prediction markets.
The CFTC has proposed rules that would generally allow sporting event contracts and restrict categories linked to injuries, referee decisions, high school sports, fights, war, terrorism and other events the agency deems sensitive or easily manipulated.
Fortinsky said he believes sports trading should be viewed as a legitimate asset class.
“Sports is as legitimate an asset class as cryptocurrency, like other futures,” he said.
If sports prediction markets were treated as barter or event contracts, they could be scaled nationally through federal regulation. If courts or lawmakers rule that they are functionally sports betting, they could be pushed back into the gaming system on a state-by-state basis.
The reward is big enough to explain the rush. Sports offer the ingredients that prediction markets need: constant events, passionate fans, live swings, media attention and consistent results that can be priced in real time.
But competition for customers and their money is fierce. Some in the industry are already questioning how many sports prediction platforms the market can support once the early rush gives way to a fight for volume, pricing and regulatory durability.
Liquidity in prediction markets can compound quickly. Investors go where the markets are deepest. Kalshi’s weekend volume shows what dominance looks like when liquidity becomes concentrated.
Prediction market volumes rose over the weekend, with Kalshi posting volumes of $3.38 billion, up 35% month over month, according to Piper Sandler analyst Patrick Moley. Kalshi confirmed the figures to CNBC. Moley said Polymarket was up 33% month-on-month to $1.41 billion, but Polymarket’s U.S. volumes for Sunday have not yet been released. Rothera, the CFTC-regulated prediction market exchange in partnership with Robinhood, had $131.4 million in volume over the weekend and Friday.
Although exchanges report weekend activity differently, it shows how concentrated the category is already. Kalshi’s weekend volume was nearly 2.4 times Polymarket’s reported total and more than 25 times Rothera’s.
The question for Novig, ProphetX, Betr and the next wave of participants is whether they can create enough differentiated liquidity, product design and consumer confidence before the largest exchanges, sportsbooks and brokers define the market for them.
—CNBC’s Jessica Golden and Davis Giangiulio contributed reporting.
Disclosure: CNBC and Kalshi have a business relationship that includes customer acquisition and minority investment.
Correction: Rothera has a partnership with Robinhood. A previous version incorrectly defined the relationship between the two entities.
Novig’s $75 million Series B financing was led by Pantera Capital and included other investors such as Forerunner Ventures, NFX, Multicoin Capital, Makers Fund, and others. An earlier version of the story misstated the names of investors.
