The Commodity Futures Trading Commission has told regulated prediction market platforms to stop displaying event contracts with American-style gambling odds, warning the format could mislead traders about what they are buying. The guidance lands as state attorneys general and courts across the country keep pressing a separate fight over whether platforms such as Kalshi should be regulated as derivatives exchanges or licensed as gambling operations.
The Commodity Futures Trading Commission has told regulated prediction market platforms to stop presenting event contracts with American-style gambling odds, according to an Aug. 7 Bloomberg report. American odds display potential returns with plus or minus signs, such as +150 or -200, while prediction markets normally price contracts between $0 and $1 based on the implied probability of an event.
CFTC targets bookmaker-style pricing
The agency sent a letter to regulated entities reminding them that derivatives must not be listed, solicited, or advertised through deceptive practices, and that contract prices should appear in nominal or percentage terms rather than bookmaker-style odds. It also cited research linking American-style odds to increased risk-taking in sports betting. Bloomberg reported, citing sources familiar with the matter, that CFTC Chairman Michael Selig had raised concerns about the marketing format. Exchanges, brokers, and other firms offering event contracts must confirm receipt of the letter by 31 August.
States escalate the gambling dispute
The warning arrives as state regulators keep challenging the CFTC's jurisdiction over event contracts. New York Attorney General Letitia James sued Kalshi on July 31, seeking at least $36 billion in damages and penalties, alleging the platform runs an unlicensed gambling business. Attorneys general from 44 states have recently urged the CFTC to withdraw and rewrite its proposed prediction market rules, arguing states should keep authority over sports-related contracts.
But courts have also sided with states. A Wisconsin federal court rejected the CFTC's request to block state gambling-law enforcement against prediction platforms. Washington also secured a preliminary injunction against Kalshi in July.
Kalshi fights Utah ruling
Kalshi filed an emergency motion for an injunction pending appeal after a Utah federal court ruled the state could enforce its anti-gambling laws against the platform. Gaming law expert Daniel Wallach said Kalshi sought expedited relief because it fears Utah Attorney General Derek Brown could pursue civil or criminal charges while the appeal is pending. Kalshi intends to take the case to the U.S. Court of Appeals for the Tenth Circuit.
Sources: crypto.news, Finance Magnates
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