ProphetX合作测试CFTC预测市场规则

ProphetX has launched its first business-to-business (B2B) prediction market partnership, allowing Players’ Lounge users to access federally regulated sports event contracts without leaving the competitive video gaming platform.

But Players’ Lounge is not registered with the Commodity Futures Trading Commission (CFTC) or National Futures Association (NFA) as a brokerage or other derivatives intermediary. Instead, it provides the branded front end, while customers open accounts directly with ProphetX and the company handles account onboarding, identity checks, trades and settlements.

The partnership announced Thursday comes just over a month after ProphetX launched its own nationwide exchange and as the company increasingly presents B2B distribution as a major part of its strategy. CEO Dean Sisun recently told Earnings+More that supplying sports contracts to outside platforms is where ProphetX believes the industry is headed.

The deal also puts ProphetX at the center of an unsettled regulatory debate. Two weeks before the announcement, the company asked the CFTC to create an industry-wide framework allowing consumer apps and other technology providers to offer prediction market access without registering as introducing brokers (IBs) or obtaining individual regulatory relief.

ProphetX looks beyond its own app

ProphetX launched nationally in mid-June, shortly after receiving approval to operate both an exchange and its own clearinghouse.

The CFTC registered ProphetX as a derivatives clearing organization (DCO) on June 10 and approved it as a designated contract market (DCM) the following day. Those approvals allow ProphetX to list sports event contracts, match buyers and sellers and clear the resulting trades through its own regulated infrastructure.

Although ProphetX launched with a direct-to-consumer app, it has made clear that it also wants to distribute its contracts through outside brands.

“Those are the models we want to pursue and where we think the space is going,” Sisun told Earnings+More, referring to integrations such as Robinhood’s relationship with Kalshi and Underdog’s original arrangement with Crypto.com.

Sisun said brokerages could eventually connect to multiple exchanges and route orders based on price, contract availability or the financial terms offered by each venue.

ProphetX’s partnerships page promotes several versions of that strategy, including embedding its markets in existing apps and powering products launched under another company’s branding. The company calls itself “the exchange behind the exchange.”

Players’ Lounge is the first public implementation. ProphetX said it expects to announce additional B2B partnerships this summer and later in the year.

The Players’ Lounge terms are also written to cover ProphetX or any other CFTC-regulated DCM with which the company may engage. That leaves room for PL Predict to eventually incorporate contracts from multiple exchanges rather than remain a ProphetX-only product.

CFTC comments reveal split over tech-provider model

The Players’ Lounge launch follows a recently closed CFTC review of regulations that may make it harder for financial technology companies to work with regulated firms.

The agency’s request for information (RFI) asked companies to identify registration requirements, guidance, no-action letters and other policies they believed were poorly suited to new technology and business models.

The 21-day comment period ended July 9. The RFI was not a proposed rule, and the CFTC has not committed to making any changes. The responses could, however, be used to develop future rules, guidance or other agency action.

One dispute directly relevant to the Players’ Lounge deal was whether consumer-facing platforms that display regulated contracts, promote particular exchanges and transmit customer instructions should need IB registration.

Several fintech firms argued that passive software providers should not be treated like traditional intermediaries when they do not hold customer funds, exercise discretion over individual orders or provide personalized trading advice.

Traditional exchange commenters, including CME Group and Cboe, warned against exemptions that would allow companies to perform activities requiring registration under the label of technology providers.

Phantom wants relief extended to others

Phantom Technologies received its own CFTC no-action letter in March, allowing the crypto-wallet company to provide an interface connecting users with regulated derivatives markets without registering as an IB.

A no-action letter means CFTC staff agrees not to recommend an enforcement case as long as the recipient follows specified conditions. It is not a rule, and Phantom’s letter does not automatically cover other companies.

Phantom told the CFTC it planned to market particular contracts and platforms, share revenue with regulated partners and potentially charge users transaction-based fees.

CFTC staff said Phantom’s planned activities constituted IB activity requiring registration and that some fell outside earlier staff guidance for software vendors. Staff nevertheless granted no-action relief because Phantom would remain passive in individual orders, would not hold customer funds and would not control routing or execution.

In a July 9 comment responding to the CFTC’s fintech RFI, Phantom and the Hyperliquid Policy Center asked the commission to turn Phantom’s individualized no-action relief into a rule covering all similarly situated technology providers, eliminating the need for each company to obtain a separate letter.

ProphetX also seeks class-wide exemption

ProphetX made a similar request in its own July 9 comment to the RFI.

The company said exchanges considering third-party integrations currently must determine whether the technology provider has received individual relief, is prepared to seek it or is willing to operate with uncertainty over possible IB registration.

ProphetX asked for a class-wide exemption covering sports apps, media platforms, data providers and other companies that supply the front-end technology through which users access regulated event contracts.

Players’ Lounge provides the storefront

Players’ Lounge is best known as a platform where users compete for money based on their own performance in video games like Madden NFL, NBA 2K, Call of Duty and Fortnite.

Through the new PL Predict product, eligible users can also access ProphetX contracts covering the NFL, NBA, international soccer and other sports.

“Prediction markets on ProphetX are a perfect fit for what Players’ Lounge is all about: putting your knowledge to work in a fair, skill-driven environment,” Players’ Lounge CEO Austin Woolridge said in the announcement. “We’re excited to give our community a regulated, exchange-based way to trade on the games they care about most.”

The press release says Players’ Lounge has integrated ProphetX’s exchange within its platform. Its separate legal terms, however, carefully limit the company’s role.

According to its PL Predict terms, Players’ Lounge is not registered with the CFTC in any capacity and is not an NFA member. It describes itself as an independent software vendor (ISV), rather than a DCM, futures commission merchant (FCM) or IB.

Players’ Lounge stays separate

The company also says it does not solicit or accept orders, hold customer funds, execute trades, provide trading recommendations or take part in opening or managing ProphetX accounts.

Most notably, despite embedding and marketing ProphetX contracts through PL Predict, Players’ Lounge says it does not “recommend, endorse, propose, vouch for or encourage” customers to use ProphetX or any other CFTC-regulated exchange.

Customers must first establish an account directly with ProphetX. Any instruction entered through PL Predict is then transmitted to the exchange through an application programming interface (API).