- Novig, a sports-based prediction market platform, was officially recognized by the US Commodity Futures Trading Commission as a Designated Contract Market.
- This allows Novig to offer their sports-related event contracts to all 50 states, which is expected to launch this summer.
- The company earned one of the fastest approvals in the history of the CFTC and has already surpassed $5 billion in volume.
NEW YORK – In the midst of a heated debate over the legality of prediction markets, particularly pertaining to sports, a new platform was just approved by the US Commodity Futures Trading Commission (CFTC) with the intention of becoming the biggest sports prediction market available.
Novig announced that it earned a title as a Designated Contract Market (DCM) from the CFTC on Tuesday, allowing it to operate in every US state. The platform will enforce multiple protective measures common to the stock market, such as “enhanced market surveillance, protections against manipulation and insider activity, and comprehensive compliance standards designed to protect participants.”
As previously mentioned, Novig’s primary market is expected to be sporting events, which is sure to stir up plenty of drama in the coming months, as multiple states have sued the CFTC and prediction markets alike for what they believe to be infringement of current sports betting laws.
The company says that it will “eliminate unfair odds, and punitive limits on winning players, removing structural inefficiencies and aligning incentives with participants to create a more rational, market-driven environment where skill is rewarded and everyday fans have a real chance to win.”
According to Novig, the prediction market has already accumulated over $5 billion in volume.
Why Are Prediction Markets Controversial?
Both states and Native American tribes have been outspoken in their stance against prediction markets, as they argue that they should be legislated the same way as legal sports betting sites, which follow strict age and tax laws.
Many players have turned to prediction markets rather than traditional sports betting, which has resulted in states and tribes missing out on potentially hundreds of millions of dollars.
However, despite numerous lawsuits and court hearings, there has not been any ruling or definitive evidence against prediction markets that would subject them to the same rules as traditional sports betting.
Because the “contracts” that prediction markets offer can be bought and sold – or “traded” – they are recognized similarly to the stock market and are protected by the CFTC’s federal jurisdiction.
