Fantasy Sports Giant Sleeper Accuses CFTC of ‘Abuse’ and ‘Mismanagement’ in Blocking License Application
The popular fantasy sports platform Sleeper is accusing the Commodity Futures Trading Commission (CFTC) of unlawfully blocking its application to become a registered Futures Commission Merchant (FCM), a move the company’s lawyers are calling a “grossly illegal” abuse of power. The dispute has escalated to the point where Sleeper’s legal team has filed a formal complaint with the Inspectors General of the Treasury Department and the CFTC, asking for an investigation into the matter. The news was first reported by the industry newsletter The Closing Line.
The Core of the Dispute: A License in Limbo
Sleeper, one of the largest fantasy sports apps in the United States, submitted its application to become a registered FCM in May. This registration is a key step for the company to be able to partner with a regulated prediction market, like Kalshi, and to offer event-based contracts, including sports, to its massive user base.
According to the company’s lawyers, the National Futures Association (NFA), which handles the initial review of these applications under authority delegated by the CFTC, had deemed Sleeper’s application complete in late August and was preparing to approve it.
However, at that point, the CFTC staff reportedly intervened, instructing the NFA to halt the approval process. The reason given for the delay was a set of “unspecified concerns” about the event contracts that would be offered on a partner exchange.
A “Highly Irregular” and “Unlawful” Intervention
Sleeper’s legal team, led by the former CFTC official Joshua Sterling, has pushed back hard against this intervention. In a letter to the CFTC, Sterling argued that the delay is a violation of the Commodity Exchange Act, which entitles Sleeper to its registration.
“The Commodity Futures Trading Commission is violating the law in refusing to approve our client’s application,” the letter states. Sterling went on to describe the CFTC’s actions as “abuse, mismanagement, and waste” and “highly irregular.”
He argued that as an FCM, Sleeper would have no role in the creation or listing of the event contracts themselves, making the CFTC’s stated concerns irrelevant to its registration. He also warned that the move has “undermined the NFA’s delegated authority and wasted agency resources,” and that the CFTC has eroded trust in the rule of law by “picking winners and losers.”
A Formal Complaint and a Broader Pattern of Obstruction
After a series of unsuccessful attempts to resolve the issue directly with the CFTC, Sterling has taken the extraordinary step of filing a formal complaint with the agency’s Inspector General. The complaint is titled “Abuse, Mismanagement, and Waste by the CFTC under its Acting Chairman and Sole Commissioner.”
The complaint asks for an investigation not just into the handling of Sleeper’s application, but also into what it suggests may be a “broader potential illegality” and a pattern of obstruction within the agency.
The dispute is not happening in a vacuum. It is the latest flashpoint in the ongoing “prediction wars,” a complex and high-stakes battle over the future of a new and disruptive form of wagering.
- Kalshi, another of Sterling’s clients, is currently engaged in its own legal battles with several states over the legality of its sports-related contracts.
- PrizePicks, DraftKings, and Fanatics have all reportedly begun the process of seeking registration with the NFA.
- Underdog Sports has already launched its own prediction market offering through a technology partnership, without registering as an FCM.
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