Smarkets to take a punt on American prediction market

With 1m active accounts and annual revenues of about $32m, Smarkets, an event-based contract exchange, is arguably a close second to Betfair in the UK prediction marketplace. Now it has its sights set on the US, where there has been a boom in prediction markets in the past 18 months.

“The Trump administration is very proactive in promoting innovation, and the regulator has taken a pragmatic approach to new entrants,” says Smarkets CEO Jason Trost. He is optimistic that the Commodity Futures Trading Commission (CFTC) will approve Smarkets to open by the end of this year, if not sooner.

Trost sees a huge opportunity across the Atlantic where millions of Americans have recently joined the craze for deploying money on platforms such as Kalshi and Polymarket. They can trade “event-based contracts” on everything from coming election outcomes and the length of the war with Iran to the winner of the March Madness basketball tournament.

Trost quit his trading job at UBS in New York to start the firm in London in 2008 because prediction markets were then illegal in the US. A self-described left-leaning political junkie, his interest in prediction markets was piqued in 2004 by a now defunct Irish site offering real-time predictions on the George W Bush v John Kerry presidential race.

Contracts predicting news events have the potential to be an important addition to mainstream financial markets, says Trost, enabling more informed decision making by investors and others by tapping the “wisdom of crowds”. Yet he is more candid than his US peers at Kalshi and Polymarket about the limitations of this kind of contract – which he says are “too infrequent and too irregular”. While they talk up the business potential of betting on every aspect of life as part of a broad “democratisation of finance”, Trost thinks the real driver of growth in the US, as it has been in the UK, will be betting on live sporting events.

A court decision in September 2024 required the CFTC to allow and regulate Kalshi’s political events-based contracts. This has proved to be a game-changer, establishing a single nationwide federal regulator, and permitting anyone aged at least 18 to take part. Monthly transaction volume in US prediction markets grew to an estimated $20bn in January 2026 from $1.2bn a year earlier.

Trost expects Smarkets to have two key advantages over US rivals. First, its proprietary self-built technology and market-making expertise will allow it to offer a better price to customers than they get on other sports betting sites – many of which, he says, charge high margins. Second, Smarkets has a lot of experience of dealing with regulators. It has expertise in anti-money-laundering and know-your-customer compliance and knows how to customise its core exchange platform to meet local requirements.

Headlines linking prediction markets to insider trading and manipulation, and to promoting gambling addiction, especially among young American men, have led to a recent spate of lawsuits and regulatory proposals. “You’re basically talking about no rules, no oversight, no nothing. And that just feels catastrophic to me. Not just for us, but for everybody,” said Charlie Baker, president of the National Collegiate Athletic Association.

Coming from the tightly regulated UK market, Trost seems relaxed. He also hopes the fusion of sports betting and financial markets will lead to a better understanding of the difference between investing and gambling – both of which can take place in either arena.

In the UK, at least, it is harder to open a sports betting account than a stock brokerage account, yet customers can gamble equally on share prices and football scores. “Addiction needs to be monitored across all financial products, not just sports betting,” Trost believes. How this relatively nuanced approach to regulation will play in Trump’s America remains to be seen, especially as Donald Trump Jr is a paid adviser to both Kalshi and Polymarket.