PrizePicks Takes Important Step Toward Offering Predictions Markets

Performance Predictions II, LLC,  which is a subsidiary of the company that owns Prize Picks betting platform, has been granted a registration as a Futures Commission Merchant by the Commodity Futures Trading Commission.

That means PrizePicks and its parent company are the first fantasy sports operator to be recognized by the National Futures Association (NFA), and could soon offer so-called prediction markets to consumers.

At the center of this development are what are known as Designated Contract Markets (DCMs), which the NFA can regulate in open markets. With DCMs, customers can devote their own money to one side of a future event, such as an awards show prize, an election, or even sporting events.

Critics claim the DCM and prediction markets are little more than actual wagering and should be regulated by the states or not at all under such provisions in that jurisdiction. The federal government, with blessings from President Donald Trump, has sanctioned the creation of prediction or futures contract markets.

In a statement in support of the registration by the FCM, Mike Ybarra, Chief Executive Officer of PrizePicks, expressed delight.

“The honor of being the first sports entertainment platform to receive a FCM registration from the NFA is a testament to our industry-leading compliance and consumer protection programs that both the NFA and CFTC demand,” Ybarra said this week. “Acting [CFTC] Chairman Caroline Pham’s vision for the CFTC promotes innovation while reinforcing the importance of strong regulatory standards. Her leadership has set a thoughtful tone for the agency and our industry.”

PrizePicks is a behemoth in the daily fantasy sports market, ranking as the largest operator nationwide. The company offers odds and markets on countless sports and non-sports events. The latter market has drawn consumers who may not ordinarily have chosen to use a DFS site.

Daily Fantasy Sports apps and websites are legal in more than 40 states and the District of Columbia. If the CFTC continues to treat the notion of futures contract markets with such reverence, we could see a swelling of DFS operators clamoring for approval to offer such products.

But Prizepicks has beaten its competitors to the starting line, and now we will see when and how the operator will incorporate prediction markets and odds into its offerings.

“As the nation’s leader in predictions, this is a defining moment for us. We are grateful to the NFA for its thoughtful process and diligent work on our application,” said Jason Barclay, Chief Legal Officer and Head of Public Policy for PrizePicks.