- The CFTC reportedly warned regulated prediction markets against using American-style gambling odds and other practices it considers potentially deceptive.
- Kalshi said it will comply with the regulator’s guidance, while the broader industry continues debating whether prediction markets fall under federal or state authority.
- The warning comes as platforms such as Kalshi and Polymarket expand rapidly and face growing scrutiny over sports-related event contracts.
The Commodity Futures Trading Commission has reportedly warned prediction market operators against using American-style gambling odds as the regulator increases its oversight of the rapidly growing industry.
According to Bloomberg, the CFTC sent letters to regulated entities instructing them to comply with federal requirements and avoid deceptive practices when listing, advertising, or soliciting customers for prediction market contracts.
CFTC Targets American-Style Betting Odds
One focus of the warning is the use of American-style odds, commonly known as moneyline odds.
Traditional sportsbooks typically display potential returns using positive and negative numbers based on a $100 wager. Prediction markets generally operate differently, with contracts priced in cents that roughly correspond to the market-implied probability of an outcome.
For example, a contract trading at 60 cents implies approximately a 60% probability of the event occurring. Those prices can still be converted into traditional moneyline odds.
The CFTC reportedly cited research suggesting that presenting wagers using American-style odds can encourage greater risk-taking among sports bettors, contributing to the agency’s concerns about how prediction products are marketed.
Kalshi Says It Will Follow the Guidance
Kalshi confirmed that it intends to comply with the CFTC’s instructions.
The company operates as a federally regulated exchange and has increasingly expanded into event contracts covering politics, economics, sports, and other outcomes.
Polymarket and the CFTC did not immediately comment on the reported warning.
The issue is becoming increasingly important as both Kalshi and Polymarket have grown into major prediction market businesses with multibillion-dollar valuations.
Federal and State Regulators Battle for Control
The warning comes amid a much larger dispute over who has authority to regulate prediction markets, particularly when contracts involve sporting events.
CFTC Chair Michael Selig has argued that the agency has exclusive federal jurisdiction over qualifying prediction markets. The regulator has even challenged several states in court while defending that position.
States have pushed back, arguing that sports-related prediction contracts can effectively operate like sports betting and should therefore remain subject to state gambling laws.
The CFTC is also pursuing new rulemaking intended to clarify its oversight of prediction markets and the types of event contracts federally regulated exchanges can offer.
Sports Prediction Markets Face Growing Political Pressure
The federal-state dispute has also reached Congress.
Some senators and tribal gaming regulators have pushed for legislative language protecting state authority over sports betting and preventing federally regulated prediction markets from bypassing existing gaming frameworks.
That debate could become increasingly important as prediction markets expand deeper into sports and compete more directly with conventional sportsbooks.
For platforms such as Kalshi and Polymarket, the CFTC’s latest warning shows that federal oversight does not necessarily mean lighter regulation. Even if the agency succeeds in establishing broader authority over prediction markets, operators could face tighter rules governing how contracts are presented, marketed, and sold to American users.
