CFTC warns prediction markets over use of American-style sports betting odds

The US Commodity Futures Trading Commission (CFTC) has directed prediction markets to avoid using American-style gambling odds as the regulator pushes against legal challenges alleging the platforms are illegal sports betting operations.

The federal agency has warned regulated entities against displaying event contract prices using the “American” odds format, which is commonly used by bookmakers. Sports betting apps often label bets with a plus (+) or minus (-) sign followed by a number representing how much a gambler can win if they bet a certain amount.

The CFTC’s Division of Market Oversight and Market Participants Division issued a letter reminding entities involved in listing, soliciting, or accepting event contracts of their obligation to provide clear and accurate pricing information for derivatives products.

Commission staff said displaying prices in American odds format is likely to confuse users about the nature of the transaction and could limit their access to information about market depth and the impact of pricing. Derivatives need to be marked in nominal or percentage terms that reflect market pricing, the regulator said.

The divisions said market participants should present pricing and other information in a way that clearly identifies an event contract as a product traded on a CFTC-regulated exchange, rather than a higher-margin, non-market-priced bookmaking product.

The CFTC also reminded registered entities and persons that they are responsible for maintaining regulatory standards and ensuring clear communication about products offered in CFTC-regulated markets, including through the oversight of intermediaries, affiliates and partners.

The divisions warned that misleading pricing information for regulated products could violate federal law prohibiting the use of manipulative devices.

The letter comes as the CFTC faces criticism that its embrace of federally regulated prediction markets has allowed betting to thrive even in states where gambling is prohibited. The issue has led to lawsuits across the country, with major platforms such as Kalshi and Polymarket allowing users to place wagers on everything from sports and reality television to geopolitical events.

The CFTC and prediction-market operators have argued in court and publicly that their event contracts are financial derivatives fundamentally different from traditional gambling and therefore fall under the agency’s jurisdiction. Several states have disputed that position and sued the companies, alleging that the platforms effectively operate as illegal, unlicensed gambling businesses.

Introducing brokers, futures commission merchants and designated contract markets involved in prediction markets must confirm that they have received the regulator’s message by Aug. 31, according to the letter.