TL;DR
- The CFTC warned prediction market platforms to avoid using American-style betting odds, describing them as “misleading.”
- The regulator sent letters to its regulated entities demanding legal compliance and requiring them to refrain from deceptive practices in advertising and user acquisition.
- Kalshi confirmed it will comply with the directive before the established deadline; Polymarket did not respond to requests for comment.
The Commodity Futures Trading Commission (CFTC) sent a formal warning to prediction market platforms under its jurisdiction to stop using American-style betting odds, known as moneyline odds, when presenting their contracts. The information was reported by Bloomberg, which had access to one of the letters sent by the regulator.
Moneyline odds express how much is won on a $100 bet using positive or negative signs. Prediction markets, on the other hand, operate with cent-based prices that directly represent the implied probability of an event. The conversion between both formats is mathematically straightforward, but the CFTC argues that presenting information in American format encourages greater risk-taking among users, citing a study referenced in the letter itself.
The CFTC Remains Locked in a Jurisdictional Dispute
The backdrop of this measure is a deep dispute over who has the authority to regulate sports prediction markets in the United States. The agency’s chairman, Michael Selig, has argued over the past year that the CFTC holds exclusive jurisdiction over this rapidly expanding segment, going as far as suing several states that attempted to apply their own gaming and sports betting laws.
Selig also advanced a rulemaking process and argued that the agency’s statutory authority is broad enough to oversee the entire industry. Meanwhile, senators and gaming regulators have begun to push for legislative language that preserves state authority over sports betting.
Against that backdrop, platforms such as Kalshi and Polymarket reached multibillion-dollar valuations and gained significant popularity among users. Both companies have expressed themselves in favor of CFTC oversight of their businesses. A Kalshi spokesperson confirmed the platform will comply with the directive before the indicated deadline. Polymarket did not respond to requests for comment.
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