ProphetX Makes Journey From Sportsbook To Sweeps To Prediction Markets

Almost exactly eight years ago, on June 14, 2018, sportsbooks in New Jersey took their first wagers, in the wake of the Supreme Court overturning PASPA. The evolution since then included multiple unforeseen shifts.

Arguably no one understands that better than ProphetX, which has seen a butterfly-like metamorphosis. The operator began as a sportsbook, then went to a sweeps model and is now right where it believes it needs to be, as the first federally regulated sports prediction platform.

ProphetX co-founder Jake Benzaquen takes us through the process that he expects will finally allow his model to successfully compete.

The Beginning of ProphetX

On May 14, 2018, the Professional and Amateur Sports Protection Act was struck down in a 6-3 Supreme Court ruling. Almost three years later, Benzaquen and ProphetX co-founder took their unique product – more so a peer-to-peer exchange – to the New Jersey Division of Gaming Enforcement, aiming to get a sports betting license.

After gaining state approval, ProphetX launched in August 2022. It wasn’t the most ideal avenue for the product, but it was the only route available at the time.

“We decided to jump in with a sports betting license,” Benzaquen said. “It was always the product we were trying to build, but with a little bit different function, as a betting exchange. So we basically had to fit a square peg into a round hole in that process.

“It was a means to an end at that moment. And New Jersey was open to doing it, which we were happy about.”

However, the Garden State’s open mindedness proved to be an outlier. And it was still a square peg/round hole situation.

“New Jersey never actually had the right framework to do it. And every other state shut the door on us. They were not interested in an exchange,” Benzaquen said. “No one had any interest in licensing us or even considering licensing us.

“So we gave up our New Jersey license. We said we don’t want this anymore.”

Shift To Sweeps

In the summer of 2024, ProphetX opted to go to a sweepstakes-based sports trading model, often referred to as sweeps. Sweeps are free to play, and in this instance, users could earn play-for-fun tokens (Prophet Points) or purchase points in bundles (Prophet Cash) for use in contests.

Winners of contests could at a later point redeem those funds for cash.

It was a workaround that ProphetX and many others utilized – some would argue controversially so – allowing for operations across the country.

“There was no ability to succeed in a state-regulated environment,” Benzaquen said. “We went to a market without a regulator, a gray market, with a product that allowed us to operate.”

Benzaquen termed it a “really simple” decision.

“So we went from one state to about 40 states. It was huge for expanding our team, the technology, the userbase, all of that,” he said. “It operated around a loophole surrounding free-to-play and promo currency.”

And ProphetX offered all the markets familiar to sports bettors.

“We had everything: Props, parlays, moneylines, spreads, totals. And it was all peer-to-peer,” Benzaquen said.

But just a few months later, Benzaquen recognized another transition was on the horizon.

Prediction Markets Beckon

Kalshi made a huge splash in the latter stages of 2024 with election prediction markets. Then in January 2025, the exchange operator served up Super Bowl futures odds.

That was a touchstone moment for Benzaquen.

“We knew at that point that we were going to seek that CFTC license,” he said, alluding to the permission needed from the Commodities Futures Trading Commission to operate nationally as an exchange.

ProphetX began working on the application about a year ago, and the CFTC approved the license on June 11.

“We already had all the tech, policy and procedures in play. It still took a full year,” Benzaquen said, while stating that was still a pretty reasonable timeline. “A lot of the reason for the speed was because of how legitimate we were”

As a CFTC-approved exchange, market makers are allowed. ProphetX connects market makers to the consumers.

“Market makers are not a sportsbook, but they’re providing a similar experience to a sportsbook,” Benzaquen said. “However, the benefit of an exchange is you can have dozens or even hundreds of market makers. The sportsbook is only one counter-party.”

So four years after starting as an exchange, but in the square peg/round hole of state sportsbook licensee, ProphetX is where Benzaquen wanted to be all along, operating as an exchange.

“We believe we’ve found our home with the CFTC,” he said. “Now that we have our license and have the product live, we plan to improve our functionality over the next couple months, heading into football season.”