US Gaming Shift: Fliff and Onyx Pivot to Prediction Markets Amid Pressure

A major transformation is taking place in the digital gaming landscape as former sweepstakes operators seek refuge in federal financial regulation. National Futures Association records reveal that Fliff FCM LLC and Onyx Markets LLC both submitted their registration applications on August 12. Their goal is to become recognized Futures Commission Merchants, signaling a departure from the social gaming era toward the rapidly expanding field of prediction markets and event contracts.

This trend is a direct consequence of the deteriorating regulatory climate for sweepstakes in the United States. While sweepstakes gaming was a post-pandemic success story, it has recently come under intense fire. Over the past two years, regulators in more than a dozen states have moved to prohibit or restrict the dual-currency gaming model. In this setup, users redeem virtual credits for cash prizes, which authorities increasingly view as unlicensed gambling.

Numbers and facts

The speed of this industry-wide pivot is striking. Beyond Fliff and Onyx, major players like Underdog and PrizePicks have already paved the way. Underdog secured full FCM approval in January 2026 and now offers sports event contracts in 29 U.S. jurisdictions. In June, the CFTC approved both ProphetX and Novig as Designated Contract Markets within just one week of each other. MyPrize also entered the space in November 2025 through a crypto-infrastructure deal. These dates demonstrate that these are not isolated incidents but a coordinated industry movement.

An FCM acts as a regulated intermediary, similar to a stockbroker but for derivatives. Unlike an Introducing Broker, an FCM is authorized to accept and hold customer funds. This provides companies like Fliff with significant operational depth. Onyx Odds, which already utilizes an IB registration through Onyx Predictions, now seeks to bring additional capabilities in-house via Onyx Markets.

Background

The primary appeal of this new model lies in regulatory arbitrage. While traditional sports betting is strictly governed at the state level, event contracts fall under federal derivatives law overseen by the CFTC. This allows operators to reach users in states where conventional online gambling remains illegal. The product often mimics the look and feel of a sportsbook but is legally classified as a financial instrument. However, this path is not without obstacles, as a jurisdictional battle between the CFTC and state gambling regulators is currently escalating.

"The applications mark another potential move into prediction markets by operators with roots in sweepstakes-based sports gaming." - Colin Lynch, Prediction Market Analyst at Gaming America

Why it matters for German players

For German players, these developments remain a distant phenomenon, as the U.S. sweepstakes or CFTC-regulated prediction markets are incompatible with the German Interstate Treaty on Gambling (GlüStV 2021). Germany maintains a strict separation of gaming and financial products. All gambling offers must be licensed by the GGL and appear on the official whitelist. Prediction markets disguised as financial derivatives would likely be classified as illegal gambling or prohibited financial bets by BaFin.

German consumer protection features, such as the 1,000 Euro monthly deposit limit and the 1 Euro per spin cap on slots monitored via the LUGAS system, define the local market. While U.S. firms attempt to bypass state barriers through FCM registrations, the German market remains insulated by GGL oversight. Players in Germany should exclusively use providers with a German license to ensure legal safety and access to responsible gaming tools.

What it means for GGL-licensed casinos

Established operators on the GGL whitelist are monitoring these trends closely, as they illustrate how technological innovation seeks out regulatory loopholes. In Germany, however, there is little room for such experimentation. The GGL has made it clear that it will aggressively pursue any form of gray market activity. For licensed casinos, this means a stable, albeit strictly controlled, environment. The focus remains on compliance with player protection and tax obligations rather than regulatory arbitrage. Nevertheless, these U.S. innovations could eventually influence the debate on new betting formats in Europe, provided they can prove their safety and transparency.