The U.S. Commodity Futures Trading Commission (CFTC) has issued a stern warning to prediction market platforms, advising them to cease the use of American-style moneyline betting odds. This directive is part of the agency’s broader effort to enforce compliance with U.S. laws governing derivative trades and to discourage deceptive advertising practices.
American-style odds, commonly referred to as moneyline odds, indicate potential winnings based on a $100 bet, utilizing plus or minus signs to denote the odds. In contrast, prediction markets typically present prices in cents that reflect the implied probability of an event occurring. The CFTC highlighted research indicating that the use of American-style odds could lead to increased risk-taking in sports betting scenarios.
In response to the CFTC’s guidance, Kalshi, one of the leading prediction market platforms, confirmed it would adhere to the regulator’s recommendations by the set deadline. However, the company is currently embroiled in legal troubles, as the attorney general of New York has filed a lawsuit accusing Kalshi of operating an illegal gambling business, with damages sought totaling up to $36 billion.
Further complicating matters, a federal court in Utah recently ruled that anti-gambling laws can be enforced against prediction markets, including Kalshi. This ruling followed Kalshi’s previous legal action aimed at blocking such restrictions, and the platform has indicated plans to appeal the decision. Legal expert Daniel Wallach noted that Kalshi has filed an emergency motion for an injunction in the Utah federal court, seeking expedited relief while the appeal is underway.
Utah Attorney General Derek Brown has stated that enforcement actions are imminent, although specific methods have yet to be disclosed. This intensifying scrutiny from state regulators is indicative of a growing trend, as states increasingly assert their authority over prediction markets.
Meanwhile, CFTC Chair Michael Selig has consistently maintained that the agency possesses broad statutory authority over prediction markets. He has taken legal action against several states to defend this position, in addition to initiating a formal rulemaking effort to clarify the regulatory landscape. Notably, both Kalshi and another major platform, Polymarket, have expressed support for CFTC oversight, which has enabled them to achieve multibillion-dollar valuations amid rising popularity.
However, a coalition of senators and tribal gaming regulators is advocating for legislation to uphold state authority over sports betting, aiming to prevent prediction markets from encroaching on territories traditionally governed by state laws. The recent ruling in Utah marks yet another significant legal challenge for Kalshi, with its upcoming appeal poised to be a critical moment in this ongoing struggle for regulatory clarity.
