CFTC Shockwave in Prediction Markets: ‘Betting Odds’ Warning Issued to Billion-Dollar Giants

The U.S. Commodity Futures Trading Commission (CFTC) is tightening its oversight of the industry through technical details, warning prediction markets against using American-style betting odds.

In a formal letter sent to entities under its supervision, the CFTC stated that the use of American-style “moneyline” betting odds could fall under “deceptive” practices. The agency demands that prediction market platforms ensure full legal compliance and avoid methods that could mislead users in advertising or listing activities. This move demonstrates the regulator’s desire not only to ban the sector but also to shape the market according to its own standards by intervening in elements such as user interfaces and data presentation.

American-style betting odds are a system that indicates how much can be won on a $100 bet using plus or minus signs. Prediction markets, on the other hand, normally use cent-based pricing that directly reflects the probability of an event occurring. For example, prices below 50 cents translate into positive odds, while those above become negative. Citing an academic study included in its letter, the CFTC argues that such betting formats encourage users to take more risks in sports competitions.

The CFTC’s Jurisdictional Battle Over Prediction Markets

CFTC Chairman Michael Selig has firmly maintained over the past year that the agency holds exclusive jurisdiction over this rapidly growing market. Despite objections and legal processes from states based on local gambling laws, Selig is working to establish a broad oversight mechanism at the federal level. In this process, efforts by states to protect their authority over sports betting are also escalating tensions between the federal regulator and local governments.

First Reactions to Regulation from Kalshi and Polymarket

Kalshi, one of the giant platforms reaching billion-dollar valuations, announced that as a federally regulated exchange, they will strictly comply with CFTC guidance and make the necessary changes within the timeframe specified in the letter. Polymarket, one of the industry’s most popular names, remains silent on the matter. Although both platforms previously stated their support for CFTC oversight, the impact of these new technical restrictions on the user base is being closely monitored.