Key facts
- The CFTC has warned prediction markets against using American-style gambling odds.
- States are alleging that prediction markets are operating unlicensed sports betting businesses.
- New York is suing Kalshi for allegedly running an illegal, unlicensed gambling business and seeking $36 billion in damages.
- Kalshi filed an emergency motion for an injunction pending appeal in Utah federal court.
- A federal court ruled that Utah can enforce its anti-gambling laws against prediction markets.
The U.S. Commodity Futures Trading Commission (CFTC) has issued a warning to regulated prediction market platforms, advising them to cease using American-style gambling odds. This directive comes amid a growing crackdown by various states that allege these platforms are operating as unlicensed sports betting businesses.
According to a Bloomberg report, the CFTC has instructed these entities to comply with U.S. laws governing derivative trades and to avoid deceptive practices in their product listings, solicitations, and advertisements. The regulator's warning about gambling odds coincides with enforcement actions by states, which argue that sports prediction contracts offered by these platforms constitute illegal sports betting.
New York has taken a significant stance, with its attorney general suing Kalshi for allegedly operating an illegal, unlicensed gambling business and seeking damages up to $36 billion. Similarly, Nevada has obtained a court order to restrict these prediction markets from offering sports contracts within the state. A federal court in Wisconsin also indicated that state gambling laws could apply to sports prediction markets in a ruling against the CFTC and Kalshi.
In response to these pressures, Kalshi has filed an emergency motion for an injunction pending appeal with the Utah federal court. Legal expert Daniel Wallach noted on X that Kalshi is seeking expedited relief, fearing potential civil or criminal charges from Utah's Attorney General Derek Brown while its appeal is ongoing. This move follows a recent federal court ruling allowing Utah to enforce its anti-gambling laws against prediction markets, including Kalshi, which had previously sued Utah to block such enforcement.