The CFTC (Commodity Futures Trading Commission) has closed a loophole for prediction market platforms attempting to look like sports betting sites. Citing a Bloomberg report on August 7, 2026, the federal regulator instructed registered entities to remove American-style gambling odds, such as +150 or -200, from their screens.
Platforms like Kalshi have typically priced contracts between $0 and $1 based on implied probability - a system that is actually different from traditional sportsbooks. However, this new CFTC rule could force operators to review how they display contract prices and promote sports-related products. The regulator emphasized that event contracts remain subject to US derivatives laws, making it mandatory for platforms to avoid deceptive advertising practices.
Clash Between Federal and State Regulations
Although the CFTC insists on maintaining exclusive jurisdiction over designated contract markets through the Commodity Exchange Act, state-level officials refuse to back down. They claim that sports-related contracts are equivalent to betting, and therefore must be subject to local gambling licenses.
This feud culminated when 44 state Attorneys General joined forces to urge the CFTC to withdraw and rewrite its proposed rules on prediction markets. A Wisconsin federal court further weakened the prediction platforms’ position by rejecting the CFTC’s request to prevent states from enforcing their own gambling laws.
Who Is Dragging Kalshi to Court?
The heaviest blow hit Kalshi from New York. Attorney General Letitia James officially sued the platform on July 31, seeking damages and fines totaling at least $36 billion. This legal pressure was followed by Washington state, which successfully secured a preliminary injunction against Kalshi in the same month. The judge ruled that federal law does not prevent local governments from enforcing gambling restrictions in their jurisdictions.
A similar situation occurred in Utah, where a federal court ruled that the state has the right to enforce anti-gambling laws against prediction markets. In response to this ruling, Kalshi immediately filed an emergency motion to stay execution pending appeal to the US Court of Appeals for the Tenth Circuit.
Kalshi’s problems do not stop at inter-agency disputes. Former US Representative George Santos recently agreed to return $17,569.98 in trading profits from the platform. Santos also has to pay a $17,500 fine and was hit with a three-year trading ban on all Kalshi contracts.
Remaining Options for Prediction Platforms
This double pressure leaves prediction market platforms in a difficult position. While they comply with strict CFTC guidelines to be recognized as legitimate derivative providers, they continue to be hit by a wave of state lawsuits equating their products with pure gambling. Changing the odds display in the app is an easy step, but convincing 44 Attorneys General to withdraw their lawsuits is a completely different matter.
Sourced from crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
