TLDR
- The CFTC warned prediction markets to stop using plus and minus betting odds copied from sportsbooks
- Contracts must show pricing in nominal or percentage terms instead
- The regulator says the odds format could count as a manipulative or deceptive practice
- Exchanges must confirm they got the letter by August 31
- Kalshi says it will follow the new guidance by the deadline
The Commodity Futures Trading Commission sent a warning letter to prediction market operators this week. The letter tells them to stop using American-style gambling odds when listing their contracts.
This means no more plus and minus signs followed by numbers. That format is common on sports betting apps, but the CFTC says it does not belong on regulated derivatives platforms.
Instead, the agency wants contracts shown in nominal or percentage terms. These formats are meant to reflect actual market pricing rather than betting-style numbers.
The letter was posted on Friday. It reminded firms that they must follow U.S. derivatives laws when advertising or offering trades to customers.
Officials pointed to research in a footnote showing that American-style odds can push people toward riskier bets. That research helped shape the agency’s decision to act.
The CFTC did not hold back on the legal stakes either. It said displaying misleading pricing “risks violating federal law prohibiting the use of manipulative devices.”
Kalshi Responds to the Warning
The letter set a deadline of August 31. Introducing brokers, futures commission merchants, and designated contract markets must confirm they received it by that date.
Kalshi said it plans to meet that deadline without pushback. A company spokesperson told the Boston Herald that Kalshi follows CFTC guidance and will comply with the letter on time.
The company did not offer further comment beyond confirming its plan to follow the rule. Other exchanges have not yet issued public statements on the letter.
Ongoing Legal Fights Over Prediction Markets
This warning lands in the middle of a bigger fight over how prediction markets should be regulated. Sports-related contracts now make up a large share of trading volume on these platforms.
President Donald Trump has backed the CFTC’s claim that it alone should oversee prediction markets. He called that oversight “critically important” back in May.
His son, Donald Trump Jr., now advises both Kalshi and Polymarket. That connection has drawn attention as the regulatory debate continues.
Court rulings on the issue have gone in different directions depending on the state. Michigan and Nevada have forced Kalshi to limit access to certain contracts within their borders.
Meanwhile, courts in New Jersey, Arizona, and Tennessee have sided with prediction market operators. The CFTC has also gone on the offensive in some cases.
The agency has filed lawsuits against New York, New Mexico, and Kentucky. It has also filed briefs in other cases to defend its authority over these markets.
Critics say the CFTC’s approach has let sports-style betting spread into states where gambling is otherwise banned. The agency continues to argue that these contracts are derivatives, not sports bets, and it is holding to that position with this latest letter.
