CFTC orders prediction markets to drop moneyline odds in $36B fight

The CFTC has ordered regulated prediction markets to abandon American-style moneyline odds, escalating a federal-state fight over who polices a multibillion-dollar industry.

The Commodity Futures Trading Commission told regulated prediction market platforms to stop using American-style moneyline betting odds, citing federal derivatives law and "deceptive" practices, in letters dated August 7, 2026.

"As a federally regulated exchange, Kalshi follows CFTC guidance and will comply with the letter by its deadline," a Kalshi spokesperson said.

Moneyline odds show potential winnings on a $100 bet with plus or minus signs — "-150" marks a favorite, "+150" an underdog. Prediction markets instead price contracts in cents tied directly to implied probability; a 50¢ contract implies even odds, converting to negative American odds above 50¢ and positive below. The CFTC cited a study finding American-style wagers encourage more risk-taking in sports betting than probability-based pricing, giving the agency a behavioral rationale for treating the display format as more than cosmetic.

The warning lands as CFTC Chair Michael Selig presses exclusive federal jurisdiction over prediction markets, suing several states and pursuing formal rulemaking, while New York seeks at least $36 billion from Kalshi and attorneys general from 44 states urge the agency to rewrite its proposed rules.

The federal-state jurisdiction fight

Selig has spent the past year asserting the CFTC holds sole authority over prediction markets, arguing the Commodity Exchange Act covers the industry regardless of state gaming statutes. States counter that platforms offering sports-related contracts are effectively running gambling operations and should fall under local gaming laws. A Wisconsin federal court rejected the CFTC's request to shield prediction platforms from state enforcement, and Washington secured a preliminary injunction against Kalshi in July after finding federal derivatives law did not block the state from applying its gambling restrictions.

New York escalated the dispute on July 31, when Attorney General Letitia James sued Kalshi seeking at least $36 billion in damages and penalties over alleged unlicensed gambling. Kalshi denies the characterization, arguing its status as a CFTC-regulated exchange places it outside state gambling oversight. In Utah, a federal court ruled the state could enforce its anti-gambling laws against prediction markets, prompting Kalshi to file an emergency motion for an injunction pending appeal to the Tenth Circuit.

Platforms fall in line, but states push back

Kalshi's compliance signal supports the broader preference among leading prediction markets to operate inside CFTC oversight rather than face a patchwork of state restrictions. Platforms like Polymarket and Kalshi have grown into multibillion-dollar businesses, and both have publicly backed federal oversight. Senators and tribal gaming regulators, however, have begun pushing for legislative language that would preserve states' authority over sports betting and keep prediction markets from encroaching on that jurisdiction.

The CFTC has also pursued misconduct on regulated platforms. Former U.S. Representative George Santos agreed to return $17,569.98 in trading gains, pay a $17,500 penalty, and accept a three-year trading ban over Kalshi contracts.

The odds-formatting warning is a proxy fight for something bigger: whether prediction markets end up regulated like financial exchanges or treated, at least in part, like sports betting operations subject to state gambling law. That answer will shape advertising rules, product design, and market access for years to come.

This article is for informational purposes only and does not constitute investment advice.