On Friday 7th August, the Commodity Futures Trading Commission (CFTC) issued a letter to remind all regulated platforms that they shouldn’t mislead users by displaying American-style odds formats. This is because they are widely used by online gambling sites.
As such, American odds format could confuse users and mislead them about the nature of the transaction. So, what does this all mean, and how will this affect how prices at prediction market sites will be displayed? That’s exactly what we are going to look at today, as we dig into the letter and break it down for you.
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What Has the CFTC Asked Regulated Entities?
Earlier this month, the CFTC sent a letter to remind all regulated platforms that it’s their responsibility to display clear and accurate pricing. The CFTC singled out the American odds format, explaining that using this to present the prices of contracts could confuse and mislead users about the transaction and what they are actually buying.
American odds are commonly used at sportsbooks to show the odds for wagers. This odds format uses a plus and minus symbol to indicate a favorite and underdog. For example, a positive odd (+) tells bettors what the profit is on a $100 wager, while negative odds (-) represent how much bettors must bet to make $100 in profit.
The CFTC is open about its stance on this, telling all prediction market sites and regulated platforms that they shouldn’t present the prices in this way. All regulated sites now have until August 31, 2026, to remove this pricing strategy, so you will no longer see it on any sites on our
list of prediction markets
moving forward.
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How Should Event Contracts Be Priced?
Regulated prediction markets should now only display the price of each contract and remove any odds that could potentially mislead traders. For example, you should see contracts priced in the following format: $0.40 or 40¢. In this case, it indicates the contract will cost 40 cents. As always, the price will also reflect the implied probability, so this contract would have a 40% chance of happening, for instance. If your prediction is correct, you will then receive a $1 settlement, as standard.
Final Thoughts: Sportsbook-Style Odds to Be Removed from Prediction Markets
The CFTC has sent a firm warning to all regulated sites, telling them that they should not use sportsbook-style odds to represent the prices of contracts, as it could mislead users into thinking that it’s similar to gambling. The American odds format was singled out, but it’s clear that the CFTC doesn’t want any sportsbook-style odds to be used. Instead, the contract prices should just be that - prices of each contract, i.e., $0.40/40¢.
So, if you’re an existing trader at prediction market sites, you may notice this change by the end of August. If you’re thinking about joining a CFTC-regulated site, you can tap the promotional banners on this page to get started. Remember to keep checking back here for the latest industry news updates.
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