Sleeper accuses CFTC of “illegal delay” to prediction markets application

Sleeper Markets LLC, the entity operator of the popular fantasy sports app Sleeper, has publicly accused the U.S. Commodity Futures Trading Commission (CFTC) of an “illegal delay” on its application to register as a Futures Commission Merchant (FCM).

This registration is an essential regulatory requirement for Sleeper to legally facilitate customer trades, including prediction markets tied to sports betting and other events. 

The current Trump regime has been more receptive to prediction markets, as evidenced by the relaunch of PredictIt in the United States, with it being a fully-fledged and approved platform.

As for Sleeper, which has millions of users on its daily fantasy sports platform, it wants to expand into regulated prediction markets across sports, elections, and even the weather.

To do this, it must register as an FCM with the CFTC and become a member of the National Futures Association (NFA), the self-regulatory body for the derivatives industry. 

FCMs act as the middleman, handling customer orders, margins, and clearing for futures contracts.

Sleeper submitted its FCM application in early 2025, and after review in August, it appeared the statutory and regulatory requirements had been met.

CFTC thought otherwise, and staff intervened at the 11th hour, apparently instructing the NFA to withhold approval pending a further review. The reasons for this have been vague, with no clear explanation provided. 

As a result, Sleeper’s attorneys at the law firm, Milbank, issued a scathing letter to the CFTC’s Office of the Inspector General, citing the delay as a blatant violation of federal law. 

Sleeper calls out CFTC for “violating the law”

As part of the letter, titled “Abuse, Mismanagement, and Waste by the CFTC under its Acting Chairman and Sole Commissioner,” the claims include:

• The CFTC’s hold lacks any legal basis, as the CEA mandates automatic registration upon NFA approval unless there’s evidence of fitness issues.
• The delay stems from “unspecified concerns” about event contracts on unaffiliated Designated Contract Markets (DCMs).
• Acting Chairman and sole Commissioner Kristin Johnson is aware of or directing the misconduct, potentially as part of broader CFTC efforts to scrutinize prediction markets amid ongoing litigation.

This action against Sleeper doesn’t come as too much of a surprise, given recent moves from the CFTC against prediction markets. Some of these have been very aggressive, like when the Commission sued Kalshi over election betting contracts.

The next step in this case will be an interesting one, with the CFTC yet to respond publicly.

As previously suggests, the Trump administration has been acting favorably toward the prediction markets, and it shows that we are still some way off from the absence of regulatory bottlenecks right across the sector.

Image credit: SleeperMarkets

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