Sleeper looks set to become the latest daily fantasy sports company to offer a prediction market product, after it won approval to act as a futures commission merchant (FCM) — meaning it can partner with registered exchanges — more than seven months after its application was submitted.
Sleeper’s National Futures Association (NFA) application was approved Friday, the NFA website shows.
An FCM cannot offer its own contracts, but can partner with prediction markets registered as designated contract markets (DCMs), such as Kalshi or Crypto.com. Robinhood is an FCM that offers access to Kalshi’s contracts, while FanDuel Predicts is an FCM offering access to contracts from CME.
Sleeper sued CFTC in September
The approval appears to put an end to a dispute between Sleeper and the Commodity Futures Trading Commission (CFTC) over the status of the application.
Sleeper alleged that its application had been held up by the CFTC, despite the NFA being willing to approve the business. It sued the CFTC on those grounds in September, after sending a letter to the Office of the Inspector General earlier that same month.
The complaint says that on Aug. 28, the NFA informed Sleeper that its application for FCM status was complete and that it was prepared to approve the application by Sept. 4. However, it added, “on information and belief,” that the CFTC told the NFA not to approve the application.
This, Sleeper claims, was due to “unspecified concerns harbored by the Commission regarding the propriety of certain types of derivatives that are or will be listed on DCMs.”
It is not clear which DCMs Sleeper plans to partner with now that it is approved, or whether these are the same partners that the CFTC allegedly had “unspecified concerns” about.
The approval came soon after new leadership stepped into the CFTC. Michael Selig started as chair of the regulator last month after being approved by Congress. The decision to approve Sleeper’s application, after no movement for months, may suggest a difference between the approach of Selig’s CFTC and that of his interim predecessor Caroline Pham.
Underdog FCM application also approved
Sleeper is set to become the latest daily fantasy sports platform to offer event contracts, following PrizePicks and Underdog.
Underdog’s application for FCM status was also approved Friday, but the business already offered access to event contracts offered by Crypto.com, through an arrangement in which Underdog was a technology services provider to the exchange.
