The Commodity Futures Trading Commission told prediction markets to avoid using American-style gambling odds as the US regulator fends off legal challenges alleging the platforms are illicit sports betting operations.

The agency sent a warning to CFTC-regulated entities reminding firms they need to comply with U.S. laws governing derivative trades and not use “deceptive” practices to list, solicit or advertise the products, according to a letter viewed by Bloomberg. The CFTC publicly posted the letter later on Friday.

The CFTC specifically called out as prohibited the use of American-style gambling odds to market a wager. Sports betting apps often label bets with a plus (+) or minus (-) sign followed by a number representing how much a gambler can win if they bet a certain amount.

Derivatives need to be marked in nominal or percentage terms that reflect market pricing, not in the style of casino gambling bookmakers, the CFTC said in the letter. In a footnote, the agency cited a study that said American-style wagers lead to increased risk-taking in sports bets.

The letter went out to all exchanges offering so-called event contracts to ensure they are abiding by marketing and regulatory standards, according to a person familiar with the matter, adding that Chairman Michael Selig had expressed concerns around this type of marketing.

The CFTC is fighting criticism that its embrace of federally-regulated prediction markets has allowed betting to thrive, even in states that ban gambling. That has led to lawsuits across the country, with major players like Kalshi and Polymarket allowing users to place wagers on everything from sports and reality television to geopolitics.

The CFTC and prediction market platforms have argued in court and in public that their event contracts are financial derivatives that are fundamentally different than traditional gambling and should thus fall under the agency’s purview. States have disputed that idea and sued the firms, alleging the platforms amount to an illegal, unlicensed gambling operation.

Introducing brokers, futures commission merchants, and designated contract markets involved in prediction markets must confirm they’ve received the regulator’s message by Aug. 31, the letter said.

“As a federally regulated exchange, Kalshi follows CFTC guidance and will comply with the letter by its deadline,” Jacki McGavick, a spokesperson for Kalshi, said in an email.

Polymarket didn’t immediately respond to a request for comment.

“Displaying pricing information for derivatives products in bookmaker-style odds is likely to mislead market participants about the nature of the transaction into which they are entering,” according to the agency’s letter. The regulator added that confusion could be exploited to drive consumers into higher-margin bookmaking products.

Sports bets dominate prediction market trades and are at the center of the fight over how to regulate the multibillion-dollar industry, which has exploded since President Donald Trump returned to the White House. The president’s family has also entered the space, with Donald Trump Jr. serving as an adviser to both Kalshi and Polymarket.

Trump in May said it was “critically important” that the CFTC had exclusive authority over prediction markets.

©2026 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.