The Commodity Futures Trading Commission (CFTC) has warned prediction markets against using American-style “moneyline” betting odds, expressing concerns that such formats may encourage risky gambling behavior. The agency urged regulated platforms to comply with federal law and avoid deceptive presentations. Kalshi, a leading prediction market provider, stated it would follow the CFTC’s guidance. This action comes amid a broader debate over whether federal or state authorities should oversee prediction markets. CFTC Chair Michael Selig maintains the agency has sole jurisdiction, while some states argue for state-level control. The debate intensifies as platforms like Polymarket and Kalshi reach billion-dollar valuations.
The CFTC has cautioned certain prediction markets against using odds similar to those found in U.S. gambling as it seeks to increase regulation of sports betting derivatives. As reported by Bloomberg, the agency wrote to regulated organizations to ensure compliance with federal law and to avoid deceptive behavior in offering contracts or advertising them.
This action comes amid rapid growth of prediction markets in the United States, with increasing debates over whether sports betting should be regulated by federal or state laws. In the case of American odds, also called moneyline odds, betting amounts required for winning a particular sum are stated by positive and negative figures.
Prediction markets normally rely on contract prices rather than odds. The CFTC cited a study indicating that American-style betting odds may incentivize gamblers to take more risks, serving as a basis for advising online platforms.
Kalshi, one of the leading prediction market providers, said it will follow the CFTC’s instructions. “Being a federal exchange, Kalshi will comply with the CFTC guidance in letter and spirit by its deadline,” a company representative wrote in a statement.
This is part of a larger context of debates about who will be responsible for regulating prediction markets in the U.S. Michael Selig, who is the chair of the CFTC, has consistently contended that the federal agency alone has jurisdiction over prediction markets, and the CFTC has filed lawsuits against some states.
Selig is initiating rulemaking efforts concerning this industry. Yet several states claim that certain prediction markets may operate within the scope of state legislation concerning gambling and sports betting.
The importance of this discussion is heightened by the rapid growth of these platforms to valuations reaching into the billions. Both Polymarket and Kalshi have supported federal oversight, while some U.S. senators and tribal gaming regulators wish to establish legislation ensuring state sovereignty over sports betting.
