Novig raised $75M and got CFTC approval to challenge Kalshi and Polymarket in a market where Kalshi did $3.38B in a weekend. The regulatory fight and liquidity concentration will decide winners.
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Novig won CFTC approval Tuesday to operate a sports prediction market exchange, joining a wave of companies trying to break into a category that Kalshi dominated with $3.38 billion in weekend volume. The approval gives Novig a federal license to compete. The field already includes ProphetX, Polymarket, Robinhood, Crypto.com, and the biggest sportsbook operators.
The race is about more than sports betting. Prediction markets treat game outcomes as tradable contracts, priced like financial derivatives. That structure lets platforms operate under CFTC oversight rather than state gaming laws, a distinction being tested in court. Multiple states and tribes are suing Kalshi, arguing the contracts are unlicensed gambling. The CFTC this week filed its own suit against New Mexico to defend its authority.
Novig CEO Jacob Fortinsky told CNBC the company is building a peer-to-peer sports trading platform where users trade directly against each other. "We're really rendering sportsbooks obsolete," he said. The platform makes money from trading activity, not customer losses. Novig raised a $75 million Series B in February led by Pantera Capital, valuing the company at $500 million, Forbes reported. It has done more than $5 billion in cumulative volume.
ProphetX won CFTC approval a week earlier. CEO Dean Sisun said the approval positions ProphetX to become the first sports-native direct-clearing prediction market. Betr, the company co-founded by Jake Paul, is taking a distribution approach, acquiring an introducing broker to launch prediction markets powered by Polymarket. Betr CEO Joey Levy said the company offers picks, sportsbook, casino, arcade, and soon prediction markets in one app. Robinhood is using its brokerage distribution. Crypto.com is providing infrastructure for FanDuel Predicts.
For DraftKings and FanDuel, prediction markets challenge the traditional sportsbook model. DraftKings reported its predictions product had its biggest weekend yet, with customers growing over 200% compared to the prior weekend. The model is different. Sportsbooks act as counterparty to wagers, while exchanges match buyers and sellers. If prediction markets scale nationally under federal regulation, they could bypass state-by-state licensing that gives sportsbooks their moat.
Piper Sandler analyst Patrick Moley said Kalshi posted $3.38 billion in volume over the weekend, up 35% month over month. Polymarket did $1.41 billion, up 33%. Robinhood's Rothera exchange did $131.4 million. Kalshi's volume was roughly 2.4 times Polymarket's and more than 25 times Rothera's. Liquidity compounds quickly in prediction markets. Traders go where the markets are deepest. For new entrants like Novig and ProphetX, the challenge is building enough volume to attract users before the biggest players define the market.
The CFTC has proposed rules that would generally allow sports event contracts but restrict categories tied to injuries, officiating decisions, high school sports, fights, war, and terrorism. The legal fight over whether prediction markets are gambling or regulated derivatives will shape the category's future. If courts side with states, the national model collapses. If the CFTC prevails, the market could scale quickly. The next catalysts include the NFL season and midterm elections, which could drive another surge in volume.
The thesis for Novig and other new entrants holds if they can attract liquidity and differentiate their products. A reversal would come if courts rule against the CFTC's authority, forcing platforms back into state-by-state licensing. Another risk is that the biggest sportsbooks, with existing customer bases and marketing budgets, simply replicate the exchange model and crush the startups on distribution.
Fortinsky said he believes sports trading should be treated as a legitimate asset class. "Sports is just as legitimate of an asset class as crypto, as other types of futures," he said. The next test comes when the NFL season begins and the volume race resumes.
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