PrizePicks has been granted authorization to function as a Futures Commission Merchant (FCM) shortly after revealing that Allwyn Entertainment will take a majority stake in the company.
This approval, awarded to its subsidiary Performance Predictions II LLC, makes PrizePicks the pioneering enterprise linked to a daily fantasy sports operator to obtain FCM registration from the National Futures Association (NFA). This designation allows the firm to process customer orders for buying and selling futures contracts listed on Designated Contract Markets (DCMs), governed by the Commodity Futures Trading Commission (CFTC). The entity will operate under the new name “PrizePicks Predict.”
Mike Ybarra, CEO of PrizePicks, stated in a release: “Being the first sports entertainment platform to obtain FCM registration from the NFA exemplifies our leading compliance and consumer protection initiatives that both the NFA and CFTC require. Acting Chairman Caroline Pham’s vision for the CFTC encourages innovation while emphasizing the necessity for stringent regulatory standards. Her guidance has established a prudent tone for the agency and for our industry.”
Chief Legal Officer and Head of Policy Jason Barclay remarked: “As the national frontrunner in predictions, this is a landmark moment for us. We appreciate the NFA for its thorough approach and painstaking diligence during our application process.”
Allwyn’s Acquisition Plans
The regulatory sanction aligns with Allwyn Entertainment’s announcement to acquire a 62.3% stake in PrizePicks. The agreement, which values the company at about $2.5 billion, involves an initial cash investment of $1.6 billion and is anticipated to finalize in 2026.
Allwyn manages lotteries in Illinois and the UK and has aimed to broaden its reach beyond traditional lottery services. This deal represents its most significant investment within the U.S. to date. PrizePicks’ current leadership, including Ybarra, will continue post-acquisition.
Position in Prediction Markets
Securing FCM status allows PrizePicks to penetrate the regulated prediction markets sector, collaborating with platforms like Kalshi or Crypto.com for event-based contracts. Competitors are also navigating this space, with FanDuel partnering with CME Group, DraftKings engaging in acquisition talks, and Polymarket reestablishing operations in the U.S. by acquiring a CFTC-certified exchange.
Others in the sector face challenges. Daily fantasy app Sleeper has alleged that the CFTC has unlawfully stalled its pending application. DraftKings, Fanatics Betting & Gaming, and Underdog are also awaiting responses from the NFA on their applications.
PrizePicks will be just the second fantasy operator active in regulated prediction markets. Earlier this month, Underdog Sports began offering sports prediction markets through a collaboration with Crypto.com, though it has not secured FCM registration and operates as a technology provider instead.
Challenges Ahead
PrizePicks recently revised its primary product strategy, shifting from house-based Pick’em contests to a peer-to-peer format called Arena. This transition commenced in California in June and expanded nationwide by August, prompted by regulatory factors, although it may exert pressure on future revenue growth.
Analysts at Regulus Partners highlighted that while PrizePicks claims availability in over 90% of U.S. states and Canadian provinces, its footprint in regulatory jurisdictions like New York, New Jersey, Michigan, and Ontario currently extends only to free-to-play games. These markets are predominantly led by established sportsbook operators DraftKings and FanDuel.
Furthermore, Regulus pointed out that the $1.6 billion cash commitment signifies a substantial investment by Allwyn, but carries an element of uncertainty. Analysts speculated that this transaction might serve more to curb competitors’ advances into real-money prediction markets than to build a sustainable U.S. business.
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