The Commodity Futures Trading Commission has told prediction-market platforms to stop presenting event contracts using American-style gambling odds, a directive that lands in the middle of an escalating jurisdictional fight over whether sports-outcome contracts are derivatives or unlicensed sports betting.
The agency’s Enforcement Division issued the advisory on August 7, warning CFTC-regulated entities against using “deceptive” presentation — specifically moneyline-style odds such as +150 or -200, the format familiar from traditional sportsbooks — when listing, soliciting or advertising contracts. The Block, citing Bloomberg, and crypto.news both reported the advisory the same day, and the CFTC’s own press release confirmed the enforcement action.
Why the odds format matters
Prediction markets like Kalshi and Polymarket typically price contracts on a probability scale — a “yes” share trading at 62 cents implies a 62% probability the event resolves yes. American-style odds instead express payout ratios relative to a wagered amount, the convention used by sportsbooks for decades.
The CFTC’s position is that presenting probability-based derivatives contracts with betting-style odds blurs the line between a regulated financial product and a wagering product, which is exactly the distinction state regulators are contesting. By pushing platforms back toward probability-based displays, the agency is trying to reinforce its own framing of these products as derivatives rather than bets — a framing that underpins its claim to exclusive federal jurisdiction over them.
The bigger jurisdictional fight
CFTC Chair Michael Selig has argued for over a year that the agency holds exclusive authority over prediction markets under federal commodities law, a position the CFTC has defended by suing several states directly. States have pushed back with their own enforcement actions: Kentucky sued both Kalshi and Polymarket in June, alleging the platforms operated illegal sports betting businesses without a license, and the Illinois Gaming Board issued a cease-and-desist letter to Polymarket US in January after sending an earlier one to Kalshi.
Minnesota went further, enacting what reporting describes as the first state-level ban specifically targeting prediction markets, effective August 1. Kalshi and Polymarket sought an injunction to block that ban before U.S. District Judge Katherine Menendez.
Against that backdrop, the CFTC’s odds-formatting advisory functions as more than a compliance nitpick — it is a signal that the agency intends to keep tightening the presentation and marketing of these contracts to defend the derivatives classification in court and in state legislatures simultaneously.
How platforms have responded
A Kalshi spokesperson confirmed the exchange would comply with the CFTC’s directive by its deadline, telling reporters the platform “follows CFTC guidance” as a federally regulated entity. Reporting from Bettors Insider indicated that, as of the Friday deadline, multiple platforms had not yet updated their odds displays, suggesting compliance across the industry remains uneven in the advisory’s first days.
Separately, Polymarket has been working to establish a domestic regulated presence in the US market: its CEO confirmed reentry via acquisition of QCEX, a CFTC-regulated exchange, which would give Polymarket a regulated US entity for the first time. That move is distinct from the odds advisory but part of the same broader effort by prediction-market platforms to operate inside, rather than around, CFTC oversight.
The rulemaking still to come
The odds advisory is an enforcement-style warning, not the CFTC’s formal rule. That rule is still in progress: the agency published a proposed rulemaking on prediction markets on June 10, 2026, with a 45-day public comment period. Under the proposal, most sports event contracts would be permitted because they contribute to price discovery, while contracts tied to more manipulable outcomes — individual player injuries, referee decisions, specific in-game events — would be banned outright.
Until that rule is finalized, platforms are operating under a mix of informal guidance, like this week’s advisory, and active litigation in multiple states. The odds-formatting directive is a preview of how the CFTC intends to police the space in the interim.
Bottom line
This week’s advisory does not resolve whether prediction markets are derivatives or sports betting — that fight continues in courtrooms in Kentucky, Illinois and Minnesota, and in the CFTC’s pending rulemaking. What it does is narrow one specific point of friction: platforms presenting probability contracts with sportsbook-style payout odds. Kalshi has said it will comply; whether the rest of the industry follows before the CFTC escalates to formal enforcement is the next thing to watch.
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Sources and review
This article was checked against the primary or authoritative sources below .
- CFTC Enforcement Division Issues Prediction Markets Advisory — CFTC
- CFTC cautions prediction markets over using American-style 'moneyline' betting odds — The Block
- CFTC warns prediction markets over gambling-style odds — crypto.news
- CFTC Tells Prediction Markets to Ditch American-Style Odds as Sports Betting Fight Escalates — Bettors Insider
Frequently asked questions
The CFTC's Enforcement Division issued an advisory telling CFTC-regulated entities to avoid using American-style gambling odds, such as +150 or -200 moneyline formats, when listing or advertising event contracts, reminding firms that deceptive presentation can violate US derivatives law.
The advisory applies broadly to CFTC-regulated prediction-market platforms, with reporting naming Kalshi and Polymarket as the two largest operators of sports-related event contracts affected by the guidance.
That is the exact dispute. The CFTC maintains these are derivatives contracts under its exclusive federal jurisdiction. Several states argue the sports-outcome contracts function as unlicensed sports betting and have pursued cease-and-desist actions and lawsuits against the platforms.
A Kalshi spokesperson confirmed the exchange would comply with the CFTC's directive by its deadline. As of the Friday deadline, reporting indicated some platforms had not yet changed their odds displays.
The CFTC published a proposed rule on prediction markets on June 10, 2026, with a 45-day public comment period. It would generally permit sports event contracts that contribute to price discovery while banning contracts tied to individual player injuries, referee decisions or specific in-game events.
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