A new player is aiming to enter the prediction market space, as The Clearing Company — a startup mostly led by former Polymarket staff and aiming to launch event contracts on both sports and non-sports markets — revealed it had raised $15 million.
The seed funding round — announced by press release Wednesday — is led by venture capital fund Union Street Ventures, but its other participants include Coinbase, which said last month that it would launch prediction markets as part of an effort to launch a blockchain-based “everything exchange.”
The Clearing Company said it is working to build a regulated exchange, with transactions recorded on a blockchain and markets covering “crypto, politics, sports, culture & more.” That appears to align with what Coinbase announced it was building, though no details of an partnership between the two besides the investment have been announced.
Coinbase is already registered as a Designated Contract Market (DCM) by the Commodity Trading Futures Commission (CFTC) for its crypto trading operations. It could offer event contracts with that registration.
It is not yet clear when The Clearing Company may be ready to launch. If the exchange is aiming to apply for registration with the CFTC as a DCM, the path to actually accepting trades could be a long one. QCEX — which Polymarket acquired last month — and Railbird both applied in 2022, but didn’t get approval until this year.
Team of ex-Polymarket staff
The Clearing Company is mostly led by former Polymarket staff. Chief Executive Toni Gemayel was Poluymarket’s head of growth November 2023-November 2024, a period in which Polymarket experienced rapid growth, led by election markets. Gemayel also had the same role at Kalshi from February-December 2022.
Other ex-Polymarket employees now building The Clearing Company include Niraek Jain-Sharma, who was head of markets at the exchange from 2021 until March of this year, tasked with creating most of the markets on the site. He will take on a similar role at The Clearing Company.
All three members of the startup’s engineering team – Liam Kovatch, Nick Beattie, and Daniel Ramirez – also came from Polymarket, with Kovatch having been head of engineering.
‘Simplicity and imagination’
The Clearing Company’s press release suggested that the business aimed to create a simple and “seamless” market.
“Today, prediction markets function as a new kind of news, surfacing live forecasts rather than lagging headlines,” the release said. “Markets force honesty because being wrong carries a real cost, and traders are incentivized to price without bias.
“The next era of prediction markets will be shaped by the collective creativity of the internet. Their power won’t come from complex financial mechanics and clunky user interfaces, but from simplicity and imagination.”
“To scale, markets must be fun to create, seamless to trade, and supported by novel structures that unlock liquidity.”
The startup’s name may suggest some belief that it may see an opportunity to distinguish itself via its approach to clearing trades — the work of a financial institution that actually buys and sells every contract in a regulated prediction market, and handles paperwork and moves money associated with those trades. The work of the clearing house allows the user to have a more seamless trading experience. Clearing is usually something that goes unnoticed by the typical prediction market trader.
Prediction markets can have their own clearinghouse or use an outside firm. Kalshi initially used third-party clearing business LedgerX before switching to its own Kalshi Klear operation.
Prediction market space getting busier
The Clearing Company aims to enter the world of CFTC-registered prediction markets at the same time as a number of businesses look to pursue the opportunity. FanDuel last week announced a partnership with commodity exchange CME Group to launch event contracts “later this year.” FanDuel’s prediction market offering will initially focus on economic and financial indicators like GDP figures and the S&P 500, rather than sports.
DraftKings currently has a pending application to join the National Futures Association, which could be a first step to launching a prediction market of its own. During its second-quarter results announcement, DraftKings said it was “actively exploring” the space. It was also reportedly in talks to buy Railbird, which is already licensed.
However, traditional sportsbooks have been wary about event contracts on sports, amid fears that these could jeopardize their licenses. On Monday, the Ohio Casino Control Commission sent a letter to sports betting licensees warning them that their licenses could be at risk if they offer sports event contracts in the state, or partner with a company that does so.
Earlier this month, sweepstakes-based betting exchange Novig raised $18 million, and its CEO Jacob Fortinsky told InGame that the business was pursuing CFTC registration.
The world’s largest prediction market by volume, Polymarket, also appears set to launch in the U.S. as a CFTC-registered platform soon. Currently, U.S. users are not permitted to trade on Polymarket, but after the acquisition of QCEX, the exchange is planning a relaunch, and has been eyeing Sept. 5, just before the NFL season starts, as a time to do so. Polymarket is still awaiting CFTC certification for one more of its rulebook documents.
