Smarkets Pursues Dual-Track U.S. Entry Amid Federal-State Regulatory Tension

Smarkets, a UK-based betting exchange founded in 2008, is extending its operations beyond Europe and Indiana, United States. The platform already runs a betting exchange in the United Kingdom and offers services in Ireland, Malta, Sweden, and Indiana. It has applied for a Commodity Futures Trading Commission (CFTC) license and holds pending sportsbook applications in Illinois, Iowa, and Michigan. The company’s lifetime trading volume exceeds $60 billion, with sports betting driving a substantial share of that activity.

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The U.S. regulatory environment for prediction-market and sports-betting platforms remains unsettled. Several states have argued that prediction markets constitute illegal gambling, prompting the CFTC to sue multiple states to block state-level regulation. Conversely, 44 state attorneys general have asserted that the CFTC cannot be the exclusive regulator of sports-related event contracts on exchanges. In response, Smarkets is pursuing a “dual track” strategy—seeking both federal licensing from the CFTC and state-level sportsbook approvals—to navigate the ambiguity over potential federal preemption.

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• Jason Trost — Founder of Smarkets, leading the dual-track licensing effort.

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• Kalshi — Competing prediction-market platform that has publicly criticized state actions.

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Smarkets’ founder explained that the dual-track approach is a direct reaction to the unclear legal status of federal preemption. Kalshi, referencing the broader dispute, warned that state attempts to shut down federally licensed exchanges would push users offshore, harming local markets. The CFTC’s lawsuits against states and the coordinated letter from state attorneys general illustrate the ongoing jurisdictional tug-of-war.

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• “The reason we're doing the dual track is because the legal situation is unclear if the CFTC has federal preemption or not,” — Jason Trost, to smarkets founder

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• “States can't just shut down a federally licensed exchange. This would also just hurt New Yorkers, who would be driven offshore,” — Kalshi

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These statements encapsulate the core tension: Smarkets seeks regulatory clarity while competitors and states contest the scope of federal authority over prediction-market and sports-betting contracts.

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