ProphetX has submitted an application to become a federally regulated prediction market exchange, indicating a strategic move away from the increasingly restrictive sweepstakes model towards compliance with regulations set by the U.S. Commodity Futures Trading Commission (CFTC).
This transition would allow ProphetX to operate across the nation under CFTC supervision, freeing it from the inconsistent gaming regulations that currently affect sweepstakes businesses on a state-by-state basis.
“Our goal is to transition our prediction market to be regulated by the CFTC, shifting away from our current operations within the sweepstakes sector,” stated Jake Benzaquen, co-founder of ProphetX, in a discussion with InGame.
Benzaquen mentioned that ProphetX anticipates collaborating with CFTC personnel through 2026 to gain approval, calling the process “ongoing and cooperative.” The firm has submitted its applications, although it has not yet received any licenses.
“While we have submitted our applications, we have not yet secured licenses. We are actively engaging with CFTC officials to familiarize them with our business and team,” he further noted.
This development aligns with the tightening regulations surrounding sweepstakes betting. In 2025, California became the most recent state to outlaw the model, while Google retracted advertising approval for sweepstakes-based gaming applications. Regulatory bodies in multiple states have argued that “free-to-play” sweepstakes effectively function as unauthorized gambling.
Despite ongoing legal conflicts, prediction markets have gained traction as a potential alternative for legitimate real-money event trading. If successful, ProphetX will join Kalshi and Polymarket, two additional CFTC-regulated exchanges, creating a national framework that circumvents traditional state gaming challenges.
In contrast to many rivals that primarily focus on politics or entertainment, ProphetX highlights its six years of experience in sports trading as providing a competitive advantage in adapting to the CFTC environment.
“Whereas many newcomers are adjusting their platforms for sports, we are doing the reverse — modifying our sports platform to align with CFTC regulations,” noted Benzaquen.
Until at least 2026, the company intends to continue operating as a sweepstakes platform, awaiting regulatory approval.
Originally established as a state-regulated sports exchange, ProphetX has made multiple adaptations in response to evolving compliance requirements. Benzaquen described the pathway to CFTC regulation as a more sustainable avenue after several years of shifting between regulatory frameworks.
“The process has been challenging yet immensely educational,” he expressed. “There have been both upsides and downsides, but overall, we believe we’ve finally found our permanent solution with the CFTC moving ahead.”
If successful, ProphetX’s transition could indicate a larger trend within the industry towards prediction markets, as sweepstakes operators seek legal consistency and operational stability.