Startup prediction platform Railbird Exchange LLC officially received approval from the US Commodity Futures Trading Commission (CFTC) to run as a designated contract market (DCM). This development positions the company to make a dynamic entry into the expanding event-based futures trading space. However, rising backlash from the gambling sector and state regulators could dampen its ambitions.
Railbird Aims to Offer a Robust, Consumer-Friendly Platform
CFTC approval represents a significant regulatory green light for Railbird, which plans to debut its offerings later this year. The company plans to create a marketplace where users can trade contracts tied to real-world events such as elections, climate policy outcomes, economic benchmarks, cultural moments, and more.
There is real demand for people to put their money behind their views, and we are excited to help shape this space from the ground up.
Miles Saffran, Railbird Exchange CEO and co-founder
With this designation, Railbird follows in the footsteps of leading exchange platform Kalshi, which cleared the same hurdle in 2020. Unlike unregulated markets or “gray-area” prediction platforms, Railbird will be governed by the federal derivatives framework and will demonstrate institutional-grade compliance, transparency, and clearing infrastructure.
Railbird’s contracts will be cash-settled, binary event derivatives offering payouts according to objective outcomes. For example, these can be whether an economic indicator is higher than the published forecast or whether a celebrity will win an award. These contracts may be used for hedging, speculation, or even public forecasting. Railbird will clear trades through QC Clearing, LLC, a registered derivatives clearing organization.
Prediction Markets Are Becoming Increasingly Controversial
The announcement arrives at a time when the legal boundaries of event-based markets face rising scrutiny. Kalshi, a pioneer in this space, is locked in a struggle with regulators over whether its contracts infringe upon sectors traditionally occupied by gambling operators. Ongoing debates have attracted the attention of the American Gaming Association, several state attorneys general, tribal gaming entities, and a growing number of advocacy groups.
Critics argue that prediction markets could encroach on traditional gambling regulation, especially as contracts on the outcomes of sports events become increasingly common. Railbird could potentially avoid this controversy by focusing on areas such as finance, policy, and culture that arguably boast a clearer public interest and less legal baggage.
We are looking forward to allowing our users to apply the power of capital markets to everything from daily news to societal changes.
Miles Saffran, Railbird Exchange CEO and co-founder
Railbird’s experienced board and advisory roster should help it navigate the constantly shifting prediction space and the mounting political pressure facing the sector. As the market awaits its official launch, industry experts will closely watch how the company navigates its early days under federal oversight and if it can leverage its position as a newcomer to reshape the sector.