CFTC Sends Message to Prediction Markets: You Are Not a Sportsbook

By: John Mikuta

In recent guidance, the Commodity Futures Trading Commission (“CFTC”) has made clear that event contracts offered by regulated prediction-market entities must not be marketed in a format commonly used by casino gambling bookmakers.

The CFTC’s Division of Market Oversight and Market Participants Division issued a notice to all CFTC-regulated entities and affiliates regarding their obligations to refrain from engaging in misleading or deceptive practices when advertising, listing, or transacting event contracts.  The notice highlights the CFTC’s growing concerns about the promotion of event contracts using the “American odds” format associated with sports betting and casino operators rather than nominal or percentage terms that reflect market pricing.  The notice stresses that this practice could create confusion about the nature of the products being traded, thereby underscoring the increasing pressure the CFTC faces to ensure that its event contracts are distinct from state-regulated sports betting.

Rather than promulgating a new rule, the CFTC—at least for now—is relying on existing statutes and regulations.  The Commodity Exchange Act (“CEA”) lists as one of its core purposes “protect[ing] all market participants from fraudulent or other abusive sales practices.”[1]  The CEA prohibits the use of manipulative or deceptive devices in connection with swaps and other derivatives regulated by the CFTC.[2]  Further, CFTC regulation 180.1 prohibits intentionally or recklessly making misleading statements, omitting material facts, or otherwise engaging in fraudulent or deceptive practices.[3]

The CFTC’s notice emphasizes that the prohibition against deceptive practices applies to advertising, soliciting, listing, or accepting orders for event-contract derivatives to ensure that market participants are not misled about the product.  The CFTC made clear that activities likely to cause customer confusion regarding the product being listed are subject to regulatory action.

The CFTC then notes its concern about entities displaying pricing information using bookmaker-style “American odds.”  Sports betting operators typically list odds in a plus/minus format, where the minus sign marks the favorite and shows what a bettor must risk to win $100, and a plus sign marks the underdog and shows the profit on a $100 bet.  For example, a bet might be priced at ‑200/+150.

However, unlike casino-style sports betting, derivative contracts are traded between market participants at market-determined prices.  Derivative markets generally provide transparent order books showing real-time bid and ask prices.  As the CFTC notes, this provides market participants with relevant and accurate information and makes clear that contract prices are determined by competitive bidding among market participants.  It also reflects the fact that entities that list event contracts lack control over contract prices as prices are instead controlled by market forces.  This transparency allows for the aggregation of the collective knowledge of a market’s participants.

According to the CFTC, displaying derivative prices in “American odds” creates several risks, including (1) misleading users about the nature of a derivatives transaction, (2) depriving users of access to information about market depth and pricing, (3) creating confusion between CFTC-regulated derivatives and sports betting products, and (4) steering participants into higher-margin, non-market-priced betting products.

In an unusual twist, the CFTC concluded the notice by asking all Designated Contract Markets, Futures Commission Merchants, and Introducing Brokers to review the pricing displays and marketing materials, including those displayed or used by partners or affiliates, and confirm receipt of the notice by August 31, 2026.  This action suggests that the CFTC may be contemplating future rulemaking or enforcement actions and seeks to create a documented record.

The notice arrives at a time when sports-related event contracts and prediction markets have both exploded in popularity and garnered substantial public attention and scrutiny.  The fight over the CFTC’s authority to regulate prediction markets continues to play out in litigation across the country, with resolution by the Supreme Court looking increasingly likely.[4]  The CFTC has involved itself in much of this litigation to defend its exclusive jurisdiction to oversee event contracts.[5]

The CFTC’s recent notice reflects its public stance that prediction markets are transparent, exchange-traded derivatives, not betting products.  The CFTC has a vested interest in ensuring that entities subject to its jurisdiction are offering legitimate financial products rather than sportsbook wagers.

For exchanges, brokers, and affiliates, the message is clear: pricing displays, marketing materials, contract terminology, and other disclosures must reflect a real, competitive, financial market, not a bookmaker setting odds against a bettor.  This means that event contracts must not be marketed to look or feel like a sportsbook bet.  Terms associated with casinos or sportsbooks, such as “bet,” “wager,” “bookmaker,” “odds,” or plus/minus pricing should be avoided.  Standard derivatives language, such as “trade,” “order,” “bid,” “ask,” “price,” “contract,” or “position” should be used instead.  Pricing should be shown in nominal or percentage terms reflecting market pricing, not sportsbook conventions.  Finally, entities should ensure that their partners, affiliates, and third-party providers also use derivatives language in their communications.

[1] 7 U.S.C. § 5(b).

[2] Id. § 9(1).

[3] 17 C.F.R. § 180.1

[4] See, e.g., Shwetha Surendran, New York sues Kalshi for alleged ‘illegal gambling operation’, ESPN (July 31, 2026), https://www.espn.com/espn/betting/story/_/id/49497321/new-york-accuses-kalshi-running-illegal-gambling-amid-mounting-legal-challenges.

[5] See John Mikuta, CFTC Predicting Litigation Success over Multiple States, Ifrah on iGaming (June 8, 2026), https://www.ifrahlaw.com/ifrah-on-igaming/cftc-predicting-litigation-success-over-multiple-state/.