UK-licensed betting exchange Smarkets has transformed its website to replicate the user interface (UI) of leading prediction markets platforms in the US.
Quietly rolled out last week, the revamped website has replaced decimal odds with percentage probabilities, back and lay buttons are labelled as ‘buy’ and ‘sell’, while an ‘order book’ displays ‘buy orders’ and ‘sell orders’.
The dark theme has been removed, too, while a Google search for Smarkets now brings up ‘Smarkets Predictions’.
Despite the prediction markets-like makeover, users still place bets like before, as opposed to buying or selling event contracts, à la Kalshi or Polymarket.
Founder and CEO Jason Trost told EGR: “We’ve been working on the interface the better part of a year […] we are modernising the interface, but we are doing the same thing we’ve done since 2008, which is [create] a place where people can trade events.”
The overhaul is the next step in the plan to launch Smarkets as prediction markets platform in the US.
According to Trost, who worked in financial trading before launching Smarkets in 2008, an application will be submitted “shortly” with the Commodity Futures Trading Commission (CFTC), the federal agency that regulates derivative markets, including event contracts.
The London-based company is applying for a designated contract markets (DCM) licence, which means it would be the exchange where trading takes place, as opposed to a futures commission merchant (FCM), which acts as a broker managing customer accounts.
Kalshi and Crypto.com are examples of DCMs, while Fanatics Markets and PrizePicks are FCMs.
The licensing process Smarkets is about to undertake can be a drawn-out affair, though, with the time it takes to receive approval from the CFTC to operate as a DCM often upwards of 24 months.
Smarkets is also seeking approval to act as a derivatives clearing organisation (DCO) to settle and clear trades.
“Years,” was Trost’s response when asked how long he expects to have to wait for the regulator to award Smarkets the necessary licences. “I don’t think it’ll be fast, but what can we do?” he said philosophically.
“We think we’ll have a good application. Unlike a lot of our competition, we’ve been doing this for more than 15 years – we have credibility and experience, but it’s going to take a good amount of time to go through the [licensing] process.”
Smarkets will eventually enter what is rapidly becoming a crowded arena. Kalshi is considered the market leader, though Polymarket, which exited the US in 2022 as part of a settlement with the CFTC, is making a return after acquiring CFTC-licensed exchange and clearing house QCEX.
Meanwhile, traditional sports betting operators DraftKings, FanDuel and Fanatics have thrown their hats into the prediction markets ring, as has retail brokerage Robinhood and crypto exchanges Coinbase, Crypto.com and Gemini.
There’s the real prospect of a few companies quickly cornering prediction markets. Or the legality of prediction markets – particularly sports contracts – ends up being decided by the US Supreme Court, a view expressed to EGR in December by Tekkorp Capital’s Matt Davey.
Trost noted: “We’ve always been dealing with 800-pound gorillas like [rival UK exchange] Betfair, so big competition is not something we are afraid of. We think we have a better product and pricing.”
He added: “If the market gets shuts down it’ll be a bummer but it’s out of our hands right now.”
Smarkets already has a foothold in the US with SBK, which is the firm’s exchange product but with a traditional bookmaker-like UI where customer can only back selections.
SBK is live in Indiana and licensed by the Indiana Gaming Commission. It’s also available in the UK, Ireland, Sweden and Malta.
Trost said he’s “very optimistic” about the outlook for prediction markets in the US, not least because this is, in his words, “the first time you have a federal regulation framework for sports betting”.
“To be clear, most of the money from prediction markets is going to come from sports – not from the popular interest markets,” he added.
“There’s no question Americans love to bet [on] sports, and there’s no question that state-by-state regulation has been poorly done and rewards certain big actors.
“What’s exciting about the prediction markets angle is you don’t have a lot of the crazy state [sports betting] taxes. You have a level playing field to give the American people something they’ve always wanted, and in a fair way. That’s very exciting.”
As to whether Trost is concerned the product makeover is not what Smarkets’ existing UK customers want, he remarked: “Yes, we worry about alienating our customers but it’s a direction we want to take. We had some designs that ended up on the cutting room floor.”
Like the previous iteration of Smarkets, the platform in the UK continues to offer a full menu of sports and political markets, though he doesn’t rule out adding economic and cultural markets to the mix.
“I definitely think we should have more popular interest markets, but I think a lot of the competition has gone too far with the exotic markets.
“For example, I’m not a big fan of ‘mention markets’. I don’t think they’re that interesting, and they’re open to manipulation,” he said.
Coinbase CEO Brian Armstrong drew criticism in October when he reeled off crypto buzzwords including blockchain, Web3 and Ethereum during the New York-listed crypto exchange’s Q3 earnings call.
Event contracts containing these words had been offered on Kalshi and Polymarket ahead of and during the call, though Armstrong later downplayed the controversy by saying it happened “spontaneously” when a Coinbase employee “dropped a link in the chat”.
Meanwhile, UK and Irish betting exchange Matchbook is also planning to repurpose its product with a prediction markets UI for the US, once granted CFTC approval.
The post Smarkets overhauls frontend to US-style prediction markets interface first appeared on EGR Intel.
CEO Jason Trost says operator’s application for a designated contract markets licence in the US to be submitted “shortly” with federal derivatives regulator
The post Smarkets overhauls frontend to US-style prediction markets interface first appeared on EGR Intel.