The Commodity Futures Trading Commission (CFTC) of the United States has urged prediction markets to refrain from utilizing American-style betting odds as the regulatory body responds to legal disputes claiming these platforms act as unlawful sports betting operations.
The federal agency has cautioned regulated entities against presenting event contract pricing in the “American” odds format, which is frequently used by bookmakers. Sports betting applications typically denote bets with a plus (+) or minus (-) sign followed by a number indicating potential winnings based on the wagered amount.
In a letter, the CFTC’s Division of Market Oversight and Market Participants Division reiterated to entities that list, solicit, or accept event contracts their responsibility to furnish precise and explicit pricing information for derivative products.
CFTC officials noted that showing prices in American odds format may mislead users regarding the transaction’s nature and may hinder their access to insights about market depth and price impacts. According to the regulator, derivatives must be displayed in nominal or percentage terms that truly represent market conditions.
The divisions emphasized that market participants should present pricing and other information in a manner that clearly states an event contract is a product traded on a CFTC-regulated exchange, rather than an illicit, high-margin bookmaking product.
The CFTC has also reminded registered entities and individuals of their duty to uphold regulatory standards and ensure transparent communication about products offered in CFTC-regulated markets, including oversight of intermediaries, affiliates, and partners.
The divisions cautioned that any misleading pricing information concerning regulated products could infringe upon federal laws banning manipulative practices.
This communication arrives as the CFTC faces scrutiny for allowing federally regulated prediction markets to thrive in jurisdictions where gambling is banned. This situation has precipitated lawsuits nationwide, with major platforms, including Kalshi and Polymarket, enabling users to wager on various topics from sports and reality television to geopolitical events.
The CFTC and prediction-market operators contend in legal settings and public forums that their event contracts are distinct financial derivatives, separate from conventional gambling, and thus under the agency’s oversight. Numerous states have challenged this stance and initiated lawsuits against these companies, claiming that the platforms effectively function as illegal, unlicensed gambling entities.
Introducing brokers, futures commission merchants, and designated contract markets involved in prediction markets must confirm receipt of the regulator’s advisory by August 31, according to the letter.