Sports prediction markets are having a gold-rush moment. Enthusiasm around the World Cup and NBA finals led Kalshi to set a new daily record Saturday for trading volume at $1.2 billion.
A wave of companies is trying to stake a claim, hoping to follow suit and strike it rich in what JB Mackenzie, Robinhood’s head of prediction markets, described to CNBC as a “supercycle.”
He points not only to a packed sports summer calendar leading directly into NFL season and midterm elections, but a jammed pipeline of companies applying to the Commodity Futures Trading Commission to become designated contract markets, or DCMs.
On Tuesday, the CFTC granted approval for Novig’s DCM application. ProphetX’s was approved a week earlier. But both companies will be up against not only Kalshi, which dominates the space, but Polymarket, Robinhood, Crypto.com and the sportsbook giants FanDuel, DraftKings and Fanatics.
Novig is trying to differentiate itself with a sports-first pitch. The company, founded by Jacob Fortinsky and Kelechi Ukah, says it has received CFTC approval to operate as a federally regulated prediction market focused on sports.
Fortinsky told CNBC the company is building a peer-to-peer sports trading platform that allows users to trade directly against one another rather than bet against the house.
“What we’re doing is basically cutting out the middle man,” Fortinsky said. “We’re really rendering sportsbooks obsolete.”
Fortinsky argues that traditional sportsbooks are structurally misaligned with customers because they act as the counterparty to wagers. In Novig’s model, he said, the platform is agnostic to the outcome of a game and makes money from trading activity rather than customer losses.
The company is moving its entire business into the CFTC-regulated prediction-market category, he said. Previously, it operated in Colorado under a state sports-betting license, but then pivoted to a sweepstakes-based product before pursuing the federal exchange model. It will maintain an age limit of 21+.
It has a large war chest for a young startup. Novig raised a $75 million Series B 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 the round valued Novig at $500 million, and brought total capital raised to more than $105 million.
Novig says it has done more than $5 billion in cumulative volume and more than $8 billion in annualized volume, driven by what Fortinsky describes as sports fans increasingly approaching games like a tradable asset class.
“People, sports traders, are becoming more price sensitive,” Fortinsky said. “They’re increasingly looking at sports as an asset class.”
A crowded field
But Novig is entering a field where the race to claim first-mover status is already crowded.
ProphetX said earlier this month that the CFTC approved its applications to register as both a designated contract market, which is an exchange, and a derivatives clearing organization, which clears trades.
ProphetX CEO and co-founder Dean Sisun said the approval “positions ProphetX to become the first sports-native direct-clearing prediction market in the United States.”
The company’s claim is that it will offer sports event contracts and build a sports-native exchange and clearing structure under the CFTC framework.
Fortinsky argues Novig is built natively around the sports trader, with a product and technology stack designed for exchange-based sports trading rather than adapted from sportsbook infrastructure or general-purpose prediction markets.
The competition is not limited to exchanges.
Betr, the real-money gaming company founded by Joey Levy and YouTube star and boxer Jake Paul, is taking a distribution-first approach. The company acquired Ascent Capital Management, a National Futures Association-registered introducing broker, to accelerate its 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 offering picks, 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. given we are offering more content overall and have that differentiated experience.”
Levy added that Betr is seeing “explosive revenue growth” while growing “efficiently and profitably.”
Robinhood brings another model: brokerage distribution, giving event contracts exposure to consumers who already think in terms of trading, probabilities and market prices rather than traditional betting slips.
Crypto.com is playing an infrastructure role. FanDuel Predicts announced an expanded event-contract offering through Crypto.com’s CFTC-regulated exchange and clearinghouse, OG Prediction Markets, broadening the types of sports and entertainment markets available to customers. That gives FanDuel a way to participate in prediction markets without immediately becoming the exchange itself.
DraftKings has also moved into prediction markets, framing the category as complementary to its sportsbook business rather than a replacement. The company reported DraftKings Predictions had its biggest weekend yet. “Driven by the NBA Finals and the start of the World Cup, total customers grew over 200% compared to the prior weekend,” the company said in a news release.
Fanatics is another major sportsbook operator watching the space closely as sports trading moves from niche prediction markets toward mainstream wagering behavior.
For the sportsbook giants, the threat is obvious. They already have the customers, brands, promotions and state-by-state gaming infrastructure. But sports prediction markets challenge the basic sportsbook model by offering prices that look more like financial markets and products that may be available nationally under federal oversight.
Sports trading as an asset class
The legal fight is intensifying. Multiple states and tribes are suing Kalshi and others arguing they’re breaking the law by facilitating unlicensed gambling.
Kalshi continues to insist prediction markets are regulated by the CFTC.
The agency joined the legal fray to defend its federal oversight filing a suit this week against New Mexico in the state’s attempt to apply gaming law to prediction markets.
The CFTC has proposed rules that would generally allow sports event contracts, while restricting categories tied to injuries, officiating decisions, high school sports, fights, war, terrorism and other events the agency views as sensitive or easily manipulated.
Fortinsky said he believes sports trading should be treated as a legitimate asset class.
“Sports is just as legitimate of an asset class as crypto, as other types of futures,” he said.
If sports prediction markets are treated as swaps or event contracts, they could scale nationally through federal regulation. If courts or lawmakers decide they are functionally sports bets, they could be pushed back into the state-by-state gaming system.
The prize is large enough to explain the rush. Sports offer the ingredients prediction markets need: constant events, passionate fans, live volatility, media attention and a steady supply of outcomes that can be priced in real time.
But the competition for customers and their dollars is fierce. Some industry insiders 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.
In prediction markets, liquidity can compound quickly. Traders go where the markets are deepest. Kalshi’s weekend volume shows what dominance looks like when liquidity concentrates.
Prediction market volumes surged over the weekend, according to Piper Sandler analyst Patrick Moley, with Kalshi posting $3.38 billion in volume, up 35% month over month. Kalshi confirmed the figures to CNBC. Moley says Polymarket totaled $1.41 billion, up 33% month over month, though Polymarket U.S. volumes from Sunday had not yet been released. Rothera, the CFTC-regulated prediction market exchange that has a partnership with Robinhood, did $131.4 million in volume over the weekend and Friday.
Though exchanges report weekend activity differently, they illustrate how concentrated the category has already become. Kalshi’s weekend volume was roughly 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 differentiated liquidity, product design and consumer trust 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 which includes customer acquisition and a minority investment.
Correction: Rothera has a partnership with Robinhood.
