# ProphetX

**Type:** Prediction market exchange  
**Status:** Pre-launch (DCM/DCO applications pending)  
**Founded:** 2024-2025  
**Regulatory approach:** Compliance-first, purpose-built for sports event contracts  

## Overview

ProphetX is a U.S.-based prediction market exchange purpose-built for sports event contracts. Unlike existing operators that launched products before seeking full regulatory approval, ProphetX filed applications with the CFTC to register as both a Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO) in November 2025—before launching any trading platform. This makes it the first U.S. exchange designed from inception specifically for sports prediction markets under CFTC oversight.

## Regulatory Strategy

ProphetX's regulatory approach differs from both Kalshi (litigate to operate) and Polymarket (settle and comply). The company is pursuing proactive registration before product launch, positioning itself as a model for compliant innovation rather than regulatory arbitrage.

In April 2026, ProphetX filed comments on the CFTC's Advance Notice of Proposed Rulemaking (ANPRM) for prediction markets, proposing a Section 4(c) "conditions-based framework" for sports event contracts. Section 4(c) of the Commodity Exchange Act allows the CFTC to exempt specific transactions from regulatory requirements when in the public interest. ProphetX argues this approach would:

- Create a uniform federal standard specifically for sports event contracts
- Codify recent CFTC staff no-action relief into binding requirements
- Provide an additional basis for federal preemption over state gaming laws
- Establish express CFTC authorization that overrides Rule 40.11's prohibition on gaming contracts

The Section 4(c) proposal represents an alternative legal pathway to the existing field preemption argument. Rather than arguing sports contracts are authorized swaps despite Rule 40.11, ProphetX proposes the CFTC should expressly authorize them via statutory exemption—a framework that could survive even if courts reject the preemption doctrine.

## Market Position

ProphetX positions itself as a constructive industry participant focused on:

- Consumer protection standards
- Anti-manipulation mechanisms
- League partnership requirements
- Codifying best practices across the prediction market industry

The company recommends these standards be adopted industry-wide, not just for its own operations.

## Timeline

- **2024-2025** — Company founded
- **November 2025** — Filed CFTC applications to register as DCM and DCO
- **April 2026** — Submitted 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)