News: Fantasy App Sleeper Cries Foul To CFTC In Effort To Get Into Prediction Markets
Attorney for Sleeper: "The Commodity Futures Trading Commission is violating the law in refusing to approve our client’s application for registration as a futures commission merchant."
Attorneys for the fantasy sports app Sleeper wrote a letter to the Office of the Inspector General calling out the Commodity Futures Trading Commission for “violating the law” in dealing with Sleeper’s attempt to enter prediction markets.
The letter to OIG has a subject line of “Abuse, Mismanagement, and Waste by the CFTC under its Acting Chairman and Sole Commissioner.” The letter was posted on LinkedIn by Joshua Sterling, a partner at Milbank. Milbank is representing Kalshi in current litigation around the country.
Sleeper is attempting to register as a futures commission merchant, which would allow it to work with a designated contract market like Kalshi or Crypto.com to offer prediction markets, including sports betting. Robinhood operates as an FCM in its relationship with Kalshi to offer sports betting and other prediction markets nationwide.
Sleeper and Sleeper Markets LLC are listed as pending members of the National Futures Association. That approval is a necessary step to becoming an FCM.
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From the letter:
“On behalf of our client, Sleeper Markets LLC (“Sleeper”), we are reporting to you that the Commodity Futures Trading Commission is violating the law in refusing to approve our client’s application for registration as a futures commission merchant (“FCM”) under the Commodity Exchange Act (“CEA”). We understand that this illegal delay has been undertaken at the direction, or at least with the full knowledge, of the CFTC’s Acting Chairman and sole Commissioner.
As Inspectors General charged with investigating abuse, waste, and mismanagement within the Federal government, we request that you conduct an investigation of both the current disposition of Sleeper’s application—to which it is entitled by law, today—and the broader potential illegality this incident strongly suggests may be occurring.”
And near the end:
“The Commission has broken the law by denying our client the registration to which it is entitled under the CEA. If this is as far as the misconduct goes, it is bad enough. But we are concerned that this kind of misconduct may be more widespread.”
More from the letter detailing a timeline of events:
“…the National Futures Association (“NFA”) was prepared to approve Sleeper’s application until the CFTC halted approval, without explanation.”
“On or around August 27, 2025, NFA completed its review of Sleeper’s application and was prepared to approve its registration as an FCM, consistent with its general practice. At that point, NFA informed Sleeper that its application was complete.”
“Sometime around that date, CFTC staff instructed NFA not to approve Sleeper’s FCM application, even though NFA had determined it was complete. Instead, CFTC staff instructed NFA to withhold granting registration pending the Commission’s review and determination that NFA could proceed.”
“The reason for this action appears to be unspecified concerns by the Commission about the propriety of certain event contracts that are or will be listed on a designated contract market (“DCM”) that is unaffiliated with Sleeper. But as an FCM, Sleeper would have no role in self-certifying those contracts with the CFTC and listing them for trading on the DCM.”
“The CFTC’s Acting General Counsel informed us on the morning of September 5, 2025, that the Commission had not received Sleeper’s application materials from NFA. The Acting General Counsel also indicated that the Commission thought the application was incomplete. These statements conflict with Sleeper’s understanding from discussions with NFA.”
“In response, we issued a formal demand letter to Acting Chairman Pham on September 5, 2025, outlining our concerns and requesting that the Commission approve Sleeper’s application without further delay, as required by the CEA. Specifically, we notified the Commission that it is acting against Sleeper in an arbitrary and capricious manner, it is denying our client basic due process, an it is irreparably harming our client’s interests.” …
“On the morning of September 8, 2025, we spoke with the CFTC’s Acting General Counsel. She requested an additional 24 hours to ascertain the disposition of Sleeper’s FCM application. She did not reassert or otherwise raise any of her prior denials.” …
“Later that morning, at approximately 11:50 a.m., we emailed the Acting Chairman to inform her of the CFTC’s Acting General Counsel’s invitation to speak with the Acting Chairman directly. We informed the Acting Chairman that, since our September 5, 2025 demand letter, we spoke with NFA, which once again indicated that Sleeper’s FCM application continues to be complete and remains ready for approval. We informed the Acting Chairman that we would be available at 7:00 p.m., if she would be amenable to discussing Sleeper’s FCM application approval. We did not receive a response back. See Exhibit 4. The Acting Chairman instead attended an industry reception in Washington, DC that evening, where she was seen by many members of the public.” …
“As of the date of this letter, we have received no further communication from the CFTC. In the absence of engagement by the Commission, we have continued to correspond with NFA regarding the status of our client’s application.”
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The rest of the letter details how Milbank said it believes the CFTC is violating the law. You can see the whole thing here:
Behind this story is the fact that one of the largest fantasy sports apps in the US is apparently close to getting into sports betting. Sleeper offers both season-long and daily fantasy/fantasy pick’em games. It was the most downloaded sports app in the United States for periods of the summer leading up to the football season.
If Sleeper does enter the space, it would be the second sports-native app to make the leap. Underdog Sports rolled out sports betting via prediction markets in a limited number of states just a few weeks ago. Underdog started offering sports event contracts without an FCM registration and is instead just acting as a technology provider.
Several other sports betting and fantasy companies have also started the registration process with the NFA, including PrizePicks, DraftKings and Fanatics.