Service levels: After eight years and a succession of pivots, ProphetX has settled on an identity that owes more to the wholesale plumbing of financial markets than to the consumer betting apps its founder once set out to disrupt.

• CEO Dean Sisun wants the exchange to become a B2B supplier of sports-based event contracts to the brokerages now weighing an entry into prediction markets.
• “Think of the Kalshi-Robinhood model or the previous Crypto.com-Underdog model,” he tells E+M.
• “Those are the models we want to pursue and where we think the space is going. We have built a product for that and have partners due to go live in the next couple of months.”

You can get it if you really want: Sisun points to some $145tn of assets held across US brokerages and roughly 3,300 brokerage firms, all of which, he says, “could turn on prediction markets if they wanted.”

• “If there is room for that many brokerages, there is room for an exchange like us to service many of them,” he adds. “That is how we think about it.”

Playing the field: Sisun’s argument is that brokers will not tie themselves to a single venue. Partners will want to “connect to multiple exchanges and route orders according to the best economics for themselves or their customers,” he says.

• “Webull, for example, could plug ProphetX in and route sports orders to either Kalshi or ProphetX depending on who has the better price, the right market or the better unit economics,” he says.
• “It is a very different competitive landscape from sportsbooks.”

Tune in, turn on: The thesis depends on prediction markets behaving less like the OSB duopoly and more like a commodity exchange open to any counterparty with the right permissions.

• Asked whether Kalshi had already pulled off an OSB-style land grab, Sisun pushes back.
• “Kalshi has a moat, but it is not an unfair moat,” he says. “It did the hard work. It did everything fair and square.”
• “I am not going to pitch an FCM by saying we can do everything Kalshi does and do it better, because that is not true,” he adds.
• “We cannot currently do crypto, political markets and economic indicators better than Kalshi. We can do sports better, so we will lead with sports.”
• But other markets, he adds, are “relatively easy for us to turn on” once a partner supplies the demand to justify the liquidity.

Seven-year itch: Getting to this point has taken time. ProphetX incorporated in 2018, built and licensed a betting exchange in the UK, returned to launch in New Jersey during the pandemic, then pivoted into sweepstakes when other states declined to engage.

• The unlock came when Crypto.com listed Super Bowl event contracts. “I said: I’ve been waiting for this for seven years,’” Sisun says.
• An application to become a designated contract market followed almost immediately.

Against state gaming taxes that can run “somewhere between roughly 5% and 50% of gross revenue,” the CFTC-regulated model carries no equivalent federal levy and requires “one license rather than the work of entering every state separately.”

• For a company without an established moat, Sisun says, “it was a no-brainer.”

What you’re proposing: Sisun is upfront about the regulatory risks at this point. He praises the CFTC – approval took seven months and the Commission was “genuinely interested in our product” – but he won’t be drawn on whether the status quo survives a Supreme Court challenge.

• “It has to be 50-50; I have no idea,” he says, but his hope is that scale becomes its own defense.
• “If the market becomes a multi-trillion-dollar industry, how difficult would it be to unwind all of it?”

Somebody tell Ken: He also believes the enthusiasm of DraftKings, and to a lesser extent Fluter/FanDuel, is real. “I have always thought FanDuel and DraftKings could become the Citadel of sports,” he says.

• “Yes, prediction markets may be eating sportsbooks’ lunch, but market making is also a major opportunity for them.”
• With Virtu and Citadel themselves yet to enter, Sisun argues, the market remains in “the very early innings.”

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