ProphetX thinks it’s found a way out of the quickly-deteriorating sweepstakes situation — and it’s betting the Commodity Futures Trading Commission will agree.
The sports betting platform has filed to become a federally regulated prediction market exchange, a move that would let it operate nationwide under the CFTC umbrella instead of navigating state-by-state gaming regulations.
“We’re looking to take our prediction market and have it regulated by the CFTC, moving from the current sweepstakes vertical we operate in to one under CFTC oversight,” said ProphetX co-founder Jake Benzaquen in an interview with InGame. “We anticipate working with staff over the next few months and into 2026 to get our prediction market available in all 50 states.”
The timing isn’t coincidental. Sweepstakes operators have watched their regulatory runway shrink dramatically in 2025. California became the latest state to ban the model, Google pulled the plug on ad certification for sweepstakes apps, and major platforms have retreated from key markets under pressure from regulators who argue the “free-to-play” structure is just gambling by any other name.
Meanwhile, prediction markets — despite their own legal battles — are certainly on the upswing.
For ProphetX, the shift represents more than regulatory arbitrage. Benzaquen said the company’s six-year focus on sports markets positions it differently than platforms that started with elections or pop culture and are now adding sports.
“While many of the new entrants are adapting their platforms to sports, we’re doing the opposite — taking our sports platform and adapting it to the CFTC framework,” he said.
The company has already begun working with CFTC staff, though Benzaquen doesn’t expect approval before 2026. ProphetX will continue operating as a sweepstakes platform in the meantime.
“We’ve filed our applications, which doesn’t mean we’ve obtained licenses yet,” he said. “We’re already working with the CFTC, meeting with them to introduce our business and our team.”
Getting crowded
If approved, ProphetX would join Kalshi and Polymarket in avoiding state gaming taxes and allowing nationwide access — a structure that’s caught the attention of major sportsbooks including DraftKings and FanDuel.
Benzaquen framed the move as finding stability after years of pivoting. ProphetX started as a state-regulated sports betting exchange before moving to sweepstakes, and he sees the CFTC path as more sustainable.
“It’s been challenging but also a great learning experience,” he said. “There have been positives and negatives along the way, but overall, we think we’ve finally found our home with the CFTC moving forward.”
