CFTC warns prediction markets over gambling-style odds

The CFTC warned prediction markets to stop using gambling-style odds, urging clear distinction from sports betting and compliance with derivatives regulations.

The U.S. Commodity Futures Trading Commission (CFTC) has formally warned regulated prediction market platforms against using American-style gambling odds, such as moneyline or bookmaker-style formats, in their product displays and marketing. These odds, typically shown with plus or minus signs (e.g., +150 or -200), are common in sports betting and may mislead consumers into viewing derivatives contracts as gambling products. The CFTC emphasized the need for platforms to comply with U.S. derivatives laws, avoid deceptive advertising, and clearly distinguish their offerings from unlicensed betting. The regulator cited research indicating that gambling-style odds could encourage excessive risk-taking and stressed that derivatives should be presented in nominal or percentage terms to reflect their regulatory status. This warning comes amid heightened state scrutiny and enforcement actions, including a lawsuit from New York against Kalshi for alleged gambling violations. Some platforms, like Kalshi, have stated they are complying with the directive, while others have not commented.