What Are Sports Perpetual Futures, and Why Does Everyone in Prediction Markets Want to Build Them?
Prediction market platforms have spent two-plus years fighting for the right to offer contracts for sports events.
Now, the more ambitious ones are already thinking about what comes after that fight: a product category called perpetual futures, or perps, that would let users bet on sports outcomes with borrowed money, indefinitely, with no expiration date on their position.
No one has launched a sports perp yet, but the conversation is certainly being had internally at multiple PM platforms. The CFTC has approved crypto perps but not sports perps. CME Group’s ongoing lawsuit against the CFTC over Bitcoin perps could kill the entire category before sports perps arrive. And nobody in the industry has a fully formed picture of what a sports perp would actually look like, given that sporting events, unlike Bitcoin prices, have a final score and a definitive end.
Despite all that, multiple industry insiders have said they expect a company to attempt to launch sports perps within the next year. To understand why the product is so appealing and so hard to build, it helps to start with the basics.
What a Standard Prediction Market Contract Does
Before understanding perps, it helps to understand what prediction market contracts do normally, and how people are used to interacting with them.
A standard Kalshi or Polymarket sports contract is a binary bet on a specific outcome. Will the Eagles cover the spread? Will the Blue Jays score more than 3.5 runs? The contract has a settlement date, which is the end of the game. The price moves between zero and one dollar based on what the market believes the probability of that outcome is. When the game ends, the contract settles at one dollar if the outcome occurred, or zero if it did not, and everyone closes their positions at settlement.
That structure maps cleanly onto how sports outcomes work. The game ends, and the results are immediately known.
What a Perpetual Future Does Differently
A perpetual future is different in just about every aspect.
Perps track the price of an underlying asset, traditionally a commodity like Bitcoin, by generating a contract that never expires. A trader who buys a Bitcoin perp is not agreeing to receive Bitcoin at a future date. They are taking a position on whether Bitcoin’s price will go up or down, and can hold that position indefinitely as long as they maintain sufficient collateral.
The mechanism that keeps the perp’s price aligned with the underlying asset’s spot price is called the funding rate. When the perp trades above spot, holders of long positions (who have bet the price will rise) pay periodic fees to holders of short positions (who have bet the price will fall). When the perp trades below spot, the payments reverse. The funding rate creates continuous financial pressure that nudges the perp price back toward the actual market price, replacing the convergence that a fixed expiration date would otherwise force.
The other critical difference is leverage. Standard prediction market contracts are fully collateralized: you put up a dollar to win a dollar. Perps allow leverage, meaning a trader can put up $100 as collateral and control a $500 position with 5x leverage. If the position moves in their favor, they earn five times the return they would have earned without leverage. If it moves against them, they can lose more than their initial stake. When a position falls below a specified collateral threshold, the exchange automatically liquidates it to prevent the trader from owing money they do not have.
That combination, no expiration, leverage, and constant price alignment through funding rates, is what makes perps simultaneously appealing to retail traders and alarming to regulators.
Why Crypto Perps Work and Why Sports Perps Are Complex
The CFTC approved Kalshi’s Bitcoin perpetual contract in May, a decision we covered extensively when CME Group sued the agency over it. The agency’s logic was that Bitcoin’s price moves continuously, 24 hours a day, seven days a week, with no natural endpoint. A perpetual contract tracking that price has obvious structural coherence. There is always a current spot price. The funding rate mechanism works continuously. Nothing forces an arbitrary settlement.
Sports outcomes simply do not work that way. An NFL game starts at 1 pm Sunday and ends roughly three hours later. The outcome is binary and terminal. The moment the final whistle blows, there is no more underlying asset to track.
That structural mismatch is the core challenge for anyone designing a sports perp. A few approaches have been discussed informally in the industry. One involves tracking a continuous aspect of sports that does not end when a game does, such as a team’s implied championship odds throughout a season, which shift as games are won and lost.
Another involves building perps around in-game statistics that update in real time, treating something like a quarterback’s expected passing yards as the underlying asset being tracked. A third involves simply applying perp mechanics to rolling sports betting markets, treating the market price of a game’s outcome contract as the underlying asset rather than the outcome itself. For example, if a favorite opens at -130, that number and tracking it are the asset.
None of these solutions is fully developed, and none has been presented to the CFTC. Novig CEO Jacob Fortinsky told Sportico that there are worlds where products mimic perps in sports, but acknowledged the structural challenge. ProphetX co-founder Jake Benzaquen said sports perps have been discussed internally, but are probably not coming soon.
The Leverage Question Is Where Regulators Get Nervous
The core regulatory concern with sports perps is not structural. It is actually social, and it’s a slippery slope when examined.
Standard prediction market contracts already attract significant criticism from state attorneys general, public health advocates, and gaming regulators who argue they function as unlicensed sports betting. Adding leverage to those contracts would mean users can bet more than they have, lose more than they wagered, and face automatic liquidation when their collateral runs out. CME Group CEO Terry Duffy, speaking at a financial conference last month, compared the current speculation market to the housing market in 2007, warning it could be “a disaster waiting to happen.”
Duffy’s company simultaneously co-launched the FanDuel Predicts app, which includes sports contracts. But his concern about systemic risk is not baseless: the 2008 financial crisis was substantially caused by leveraged positions in credit default swaps that unwound in ways nobody had fully modeled. Applying similar mechanics to sports betting markets would be, as the CFTC source told Sportico, highly skeptical territory.
The state gambling regulators already suing Kalshi over standard sports contracts, which carry no leverage, would almost certainly treat a leveraged sports perp as an even more obvious violation of their gambling laws. The same tribal sovereignty arguments we have covered in the Ninth Circuit and in New Mexico would apply. The regulatory headwinds against sports perps are stronger than those against the contracts already in litigation.
The CME Lawsuit Will Impact the Entire Category
The most immediate threat to sports perps is not regulatory skepticism about the concept. It is the CME Group’s existing lawsuit over Bitcoin perps.
CME argues that the CFTC misclassified perpetual contracts as futures when they are, in fact, swaps under the Dodd-Frank Act. Swaps are subject to more onerous regulatory requirements than futures, including mandatory dealer registration and post-trade reporting. If CME wins, the CFTC’s Bitcoin perp approval gets vacated. Kalshi’s existing crypto perp product would disappear. And the legal pathway for any subsequent perp product, and especially sports perps, closes until Congress or the courts establish a different framework.
The irony CME Group is living with in real time: its stock has fallen roughly 11% since the CFTC approved Kalshi’s Bitcoin perps in May, reflecting investor concern about competition from a more lightly regulated rival. CME is simultaneously suing to eliminate the competitive product and co-launching its own FanDuel sports prediction app. The institutional pressure the established derivatives market feels from prediction market platforms is reshaping strategy in ways that produce genuine contradictions.
The Timeline Nobody Can Agree On
Noah Zingler-Sternig, a former head of operations at Kalshi who now works as a venture capitalist, told Sportico he thinks a company will likely launch sports-related perps within the next year. Justin Deutsch, founder of the prediction market exchange STX, said platforms with strong infrastructure will move fastest. Kalshi itself is downplaying the possibility, with spokesperson Elisabeth Diana saying sports perps are not coming soon, if at all, from Kalshi. That could be viewed as a legal tactic by Kalshi, as they are focused on one legal battle at a time, and most likely don’t want to show their hand on where they stand on sports perps.
The gap between insider optimism and company-level caution probably reflects the litigation environment more than any technical constraint. A company that announces plans to build sports perps while simultaneously fighting to preserve its basic sports event contracts in a dozen state courts is adding regulatory surface area it does not currently need. The smart move, if you believe sports perps are eventually viable, is to let the crypto perp legal fights resolve first and see how the regulatory landscape looks afterward.
Whether that resolution comes from the CME lawsuit, the Sixth Circuit, or eventually the Supreme Court will determine the terrain on which sports perps either launch or do not. The product category is real enough that serious people are working on it. The runway to get there is longer and more contested than the optimists in the industry are currently acknowledging.
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