# ProphetX

**Type:** Prediction market exchange  
**Status:** Pre-launch (DCM/DCO applications pending)  
**Founded:** 2024-2025  
**Focus:** Sports event contracts with regulatory compliance-first approach  

## Overview

ProphetX is a U.S.-based prediction market exchange purpose-built for sports event contracts. Unlike existing operators that launched first and litigated later, ProphetX is building specifically for CFTC regulatory compliance from inception.

## Regulatory Strategy

ProphetX filed applications with the CFTC in November 2025 to register as both a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO)—making it the first U.S. exchange purpose-built specifically for sports event contracts.

In April 2026, ProphetX filed ANPRM comments proposing a Section 4(c) "conditions-based framework" for sports event contracts. This approach differs from the field preemption strategy used by Kalshi and others by seeking explicit CFTC authorization rather than arguing that federal commodity law preempts state gaming laws.

### Section 4(c) Framework Proposal

- Uses Section 4(c) of the Commodity Exchange Act, which allows the CFTC to exempt specific transactions from regulatory requirements when in the public interest
- Proposes creating a uniform federal standard specifically for sports event contracts
- Would codify recent CFTC staff no-action relief for technology vendors into binding requirements
- Creates explicit permission that overrides Rule 40.11's "shall not list" prohibition rather than arguing around it
- Includes consumer protection standards, anti-manipulation mechanisms, and league partnership requirements

## Positioning

ProphetX presents itself as a model for compliant innovation—purpose-built for regulatory engagement rather than regulatory arbitrage. This represents a strategic difference from incumbents: build-to-comply versus litigate-to-operate.

## Timeline

- **2024-2025** — Company founded
- **November 2025** — Filed CFTC applications for DCM and DCO registration
- **April 20, 2026** — Released ANPRM comments proposing Section 4(c) conditions-based framework for sports event contracts

## Sources

- ProphetX CFTC ANPRM comments (April 2026)
- PR Newswire announcement (April 20, 2026)