Executive Summary
PrizePicks, a prominent daily fantasy sports operator, has secured the first Futures Commission Merchant (FCM) license from the National Futures Association (NFA) for a sports entertainment entity. This regulatory milestone follows the acquisition of a 62.3% stake in PrizePicks by European lottery giant Allwyn International for $1.6 billion, part of a deal valuing PrizePicks at approximately $2.5 billion. The FCM license enables PrizePicks to officially enter the burgeoning prediction market sector, a segment analysts project could reach $95 billion by 2035. This development positions PrizePicks alongside FanDuel as a significant player in this expanding financial derivative space.
The Event in Detail
PrizePicks' subsidiary, Performance Predictions II LLC, received approval from the National Futures Association (NFA) as a Futures Commission Merchant (FCM). This designation, granted on Monday, September 22, allows PrizePicks, operating as "PrizePicks Predict," to accept orders from customers for futures contracts listed on Designated Contract Markets (DCMs) regulated by the Commodity Futures Trading Commission (CFTC). This framework enables PrizePicks to partner with existing DCMs, such as Kalshi or Crypto.com, to facilitate event-based prediction contracts, mirroring arrangements like that between Robinhood and Kalshi.
The regulatory approval coincided with Allwyn International's announcement of its acquisition of a controlling interest in PrizePicks. The $1.6 billion cash commitment represents Allwyn's largest U.S. investment to date, with the transaction expected to finalize in 2026. Post-acquisition, PrizePicks' existing leadership, including CEO Mike Ybarra, will retain their positions. Allwyn International, which operates lotteries in Illinois and the United Kingdom, is expanding its traditional lottery offerings through this strategic move.
Market Implications
This development sets a significant regulatory precedent, establishing a clear pathway for other major sports entertainment operators to enter the prediction market space under the supervision of the NFA and CFTC. The entry of a high-profile entity like PrizePicks, backed by substantial capital from Allwyn International, is expected to accelerate mainstream adoption of prediction markets by leveraging existing sports betting audiences and capital. This move also highlights a broader trend of convergence between traditional sports betting, financial derivatives, and the evolving Web3 ecosystem.
While PrizePicks now joins FanDuel as a regulated participant, other entities are exploring similar avenues. DraftKings has been rumored to be considering entry, and Underdog Sports currently offers sports prediction markets through a partnership with Crypto.com, albeit without direct FCM registration. The growth of regulated platforms is critical for instilling investor confidence and attracting institutional capital into a sector that has historically faced regulatory ambiguity. The overall prediction market is projected to grow from $1.4 billion in 2024 to $95.5 billion by 2035, representing a Compound Annual Growth Rate (CAGR) of 46.8%.
Mike Ybarra, CEO of PrizePicks, stated that the FCM registration is "a testament to our industry-leading compliance and consumer protection programs that both the NFA and CFTC demand." Jason Barclay, Chief Legal Officer and Head of Public Policy for PrizePicks, emphasized the significance of the moment, calling it "a defining moment for us." These statements underscore the company's focus on regulatory adherence and the strategic importance of this license for its future operations in the prediction market.
Broader Context
The expansion of regulated prediction markets is part of a larger shift within the financial landscape, particularly at the intersection of traditional finance and Web3. The decentralized prediction market ecosystem, characterized by platforms utilizing blockchain technology and smart contracts, offers transparent, secure, and censorship-resistant mechanisms for speculating on future events. This framework eliminates intermediaries, potentially reducing costs and increasing accessibility for global users. The appeal of decentralized prediction markets is further enhanced by the growth of Decentralized Finance (DeFi), as users increasingly seek decentralized financial solutions. Key players in this evolving space, such as Polymarket, have already made significant strides in achieving regulatory clarity, exemplified by its acquisition of QCEX, a CFTC-licensed derivatives exchange. This transition from purely speculative platforms to regulated financial tools is poised to attract further institutional investment and redefine how event-based forecasting is conducted globally.
source:[1] Another Sports Betting Powerhouse Is Getting Into Prediction Markets - Decrypt (https://decrypt.co/341437/sports-betting-powe ...)[2] Decentralized Prediction Market Size & Forecast 2025-2035 - Metatech Insights (https://vertexaisearch.cloud.google.com/groun ...)[3] PrizePicks' prediction markets path clearer after being granted CFTC approval - EGR Global (https://vertexaisearch.cloud.com/grounding-ap ...)