Prediction market operators and the CFTC have been defending event contracts in court and publicly as federally regulated derivatives rather than sports bets. The regulator is now warning regulated firms not to present those contracts using one of the most familiar conventions of American sports betting.
According to Bloomberg, the CFTC sent a letter to regulated entities reminding them that derivatives must not be listed, solicited or advertised through deceptive practices.
The agency said firms should not use American-style bookmaker odds, where prices are displayed with plus or minus signs to show how much a bettor can win from a given stake.
CFTC Targets Bookmaker-Style Odds
The CFTC said derivatives should be displayed in nominal or percentage terms that reflect market pricing as bookmaker-style pricing is likely to mislead market participants about the nature of the transaction they are entering.
The agency also cited research linking American-style odds with increased risk-taking in sports betting. CFTC Chairman Michael Selig had raised concerns about this type of marketing, Bloomberg reports, citing sources familiar with the matter.
The warning addresses a narrow operational point: if a regulated firm offers event contracts as derivatives, their pricing and marketing should reflect that regulatory character rather than borrow formats associated with sportsbook products.
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Warning Lands During State-Federal Dispute
The presentation issue arises amid a broader jurisdictional fight. The CFTC and prediction market platforms have argued in court and publicly that event contracts are financial derivatives subject to federal commodities regulation.
Several US states have taken the opposite view, alleging that sports related event contracts amount to unlicensed gambling. That dispute has become central to the expansion of regulated prediction markets in the US.
Platforms including Kalshi and Polymarket allow users to trade contracts tied to sports, entertainment, politics, geopolitics and other real-world outcomes.
States challenging the model argue that some of those contracts cross into gambling, while the platforms say they operate under federal derivatives law.
Bloomberg reported that the letter went to all exchanges offering event contracts. Introducing brokers, futures commission merchants and designated contract markets involved in prediction markets must confirm receipt of the regulator’s message by 31 August.
Publicly accessible pages reviewed by Finance Magnates did not show American-style plus-or-minus odds as the default presentation. Bloomberg did not identify which platform, interface or marketing material prompted the warning.
CFTC considered the practice important enough to issue an industry-wide warning. The legal fight over event contracts now extends beyond jurisdiction and product approval to how regulated firms display pricing and market those contracts to customers..
