How to Start a Prediction Market or Sports Betting Fund
Fund formation for managers trading event contracts and wagering strategies
Trading events, not stocks
Prediction markets and regulated sports betting have created a new kind of trading strategy, and managers are now raising pooled capital to run it. The fund questions are familiar: structure, offering documents, adviser status and investor disclosures. The strategy questions are not. Whether the fund is trading CFTC-regulated event contracts, placing wagers through licensed sportsbooks, or both changes what the fund can do, where it can do it and what it must tell investors.
We form these funds and advise the managers who run them, and we keep them on the right side of the line between a trading vehicle and a gaming operation.
What is a prediction market fund?
A prediction market fund is a private fund that pools investor capital to trade contracts whose value depends on the outcome of future events: elections, economic data releases, sports results and the like. Some of these contracts trade on exchanges regulated by the Commodity Futures Trading Commission as event contracts; others are wagers placed with licensed sportsbooks under state gaming law. The two are regulated differently, and a fund's structure, disclosures and licensing depend on which it trades and in which states.
What we do
• Form the fund, general partner and management company, domestic or offshore
• Draft offering documents that describe the strategy, its risks and the regulatory status of the markets it trades
• Advise on adviser registration or exemption, and on whether the strategy raises commodity pool or gaming licensing questions
• Review the fund's agreements with exchanges, sportsbooks and data providers
Trading events, not stocks?
Tell us which markets you trade and where your investors are, and we'll map out the structure and the issues before you raise. Or call +1 (202) 556-4455.