The Commodity Futures Trading Commission has issued a stern warning to regulated prediction markets against displaying American-style gambling odds, marking a significant escalation in federal oversight. According to a Bloomberg report dated August 7, the CFTC instructed platforms to avoid displaying contracts using American odds, which typically show potential returns using positive and negative numbers such as +150 or -200. The warning comes as the agency continues defending its authority over event contracts against state gaming regulators. American odds are commonly used by sportsbooks, while prediction markets typically price contracts between $0 and $1 based on implied probability. The CFTC also reminded registered entities that event contracts remain subject to U.S. derivatives laws and must avoid deceptive marketing practices when listing, advertising, or soliciting trades.
Kalshi has partnered with compliance technology provider Comply to help financial firms monitor employee activity on prediction markets as the platform expands its institutional business while facing mounting legal challenges. According to CNBC, Comply clients will be able to monitor employee trades placed through Kalshi's prediction markets through the integration of Kalshi trading data into Comply's regulatory software. The monitoring tools are designed to help employers identify suspicious activity, including trades that may involve material non-public information, and enforce restrictions on contracts linked to events that employees could influence or know about before the public. Kalshi plans to extend the monitoring system to its proposed perpetual futures products once those contracts become available, placing prediction market contracts alongside assets such as stocks, bonds and cryptocurrencies that are routinely covered by workplace trading controls.
The $36 billion lawsuit against Kalshi has shifted from New York state court to federal court, with the prediction market platform removing the case to the U.S. District Court for the Southern District of New York shortly after Attorney General Letitia James filed it on July 31, 2026. According to court records shared by gaming law attorney Daniel Wallach, New York Supreme Court Justice Melissa A. Crane treated the state's preliminary injunction request as moot because the case was no longer before her court. The company transferred the case arguing that New York was attempting to regulate a derivatives exchange overseen by the Commodity Futures Trading Commission (CFTC). Justice Crane's order temporarily removes the state court request from consideration, though New York could file the motion again if a federal judge sends the case back to state court.
New York's latest lawsuit significantly expands the scope of allegations beyond sports-event contracts, targeting Kalshi's acceptance of wagers on sports, elections, and entertainment events without obtaining approval from the New York State Gaming Commission. The state brings eight legal claims, including alleged violations of New York's gambling, sports wagering, and bookmaking laws, as well as the federal Wire Act. Additional allegations concern contracts tied to New York college teams, combination markets resembling parlays, and transactions that investigators say were completed using a New York-based account. The Attorney General is seeking an injunction preventing Kalshi from operating in New York without a license, along with restitution, disgorgement, an accounting, and statutory penalties. While some reports have estimated potential liability at $36 billion, the petition itself does not seek a fixed damages figure, instead requesting $100,000 for each unauthorized sports wagering offer, together with three times Kalshi's alleged gains where permitted.
During a CNBC interview on August 3, Kalshi CEO Tarek Mansour defended the platform by comparing it to Nasdaq, arguing that users trade with other participants while the prediction market platform matches positions and earns transaction fees. Mansour rejected New York's description of Kalshi as an unlicensed sportsbook and said officials could "copy and paste that lawsuit and file it against Nasdaq." The CEO claimed New Yorkers had collectively earned more than $200 million on Kalshi during 2026 and said the company proposed a system that could produce almost $10 billion in state tax revenue over five years. However, he did not publish supporting calculations during the interview, so those figures should be treated as company claims rather than verified totals. The comparison reflects Kalshi's central argument that event contracts are financial instruments rather than conventional wagers, with the firm registered as a CFTC-designated contract market. The Comply partnership also gives Kalshi a way to present its contracts as regulated financial products rather than conventional bets.
The lawsuit follows an important setback for Kalshi earlier this month, when U.S. District Judge Analisa Torres denied the company's request for a preliminary injunction that would have prevented New York regulators from enforcing state gambling laws while the broader dispute continues. On July 7, Judge Torres concluded that Kalshi had not demonstrated a sufficient likelihood of success on its argument that federal commodities law pre-empts state gambling regulation. Kalshi has appealed the ruling, maintaining its position that federal oversight by the CFTC shields it from state licensing requirements. The dispute extends well beyond New York, with attorneys general from 44 states recently urging the CFTC to withdraw and rewrite its proposed prediction market rules, arguing that states have traditionally regulated sports betting and should retain authority over sports-related contracts. A Wisconsin federal court rejected the CFTC's request to prevent state authorities from applying gambling laws to prediction platforms, while Washington secured a preliminary injunction against Kalshi in July, finding that federal derivatives law did not prevent the state from enforcing its gambling restrictions.
Kalshi filed an emergency motion for an injunction pending appeal after a Utah federal court ruled that the state could enforce its anti-gaming laws against prediction markets. According to gaming law expert Daniel Wallach, the company requested expedited relief because it fears Utah Attorney General Derek Brown could pursue civil or criminal charges while the appeal remains pending. The ruling rejected Kalshi's claim that the Commodity Exchange Act prevents Utah from regulating its sports event contracts. Utah residents could still access the platform immediately following the decision, but Brown indicated that the state planned to enforce its gambling laws. The state has not disclosed what form that enforcement will take, while Kalshi intends to take the dispute to the U.S. Court of Appeals for the Tenth Circuit. The emergency motion highlights the immediate threat prediction markets face from state enforcement actions as the legal battle over federal jurisdiction continues.
