- Staff wrote that marketing event contracts in bookmaker-style American odds contravenes the rules barring misleading practices.
- Recipients were asked to review every pricing display they or their partners run and confirm receipt by Aug. 31.
- Staff grounded the warning in the federal anti-manipulation statute and Commission Regulation 180.1.
- A study cited in a footnote found participants shown only American odds rated a 4% parlay’s chances at 53%.
WASHINGTON – A Commodity Futures Trading Commission staff letter announced Friday tells every regulated entity that lists, solicits or accepts orders for event contracts that pricing those products in American odds runs against the federal ban on misleading practices. The bookmaker format is likely to mislead traders about the nature of the transaction, staff wrote, and risks violating the prohibition on manipulative and deceptive devices.
What The Letter Says About Odds Displays
The staff letter on misleading or deceptive practices came jointly from the Division of Market Oversight and the Market Participants Division, went to CFTC-regulated entities and affiliates, and was signed by DJ Hennes, director of the Market Participants Division and acting director of the Division of Market Oversight.
Staff wrote that it is concerned by reports of potential violations by entities involved in listing, soliciting or accepting event contracts, “including that some CFTC-regulated products are being marketed not in nominal or percentage terms that reflect market pricing, but in the ‘American odds’ format used by casino gambling bookmakers, in contravention of these rules.”
Displaying derivatives prices in bookmaker-style odds “is likely to mislead market participants about the nature of the transaction into which they are entering and may deprive users of access to indicia of market depth and pricing impact,” the divisions wrote.
The letter names no exchange and no company. It applies to designated contract markets, introducing brokers and futures commission merchants alike, and it extends past their own screens. Staff wrote that a designated contract market is expected to hold its intermediaries, affiliates and partners to the standard too, and that recipients should look at the rest of their marketing and informational practices, not the price display alone.
The agency has no authority over legal sports betting, which states license operator by operator, so the format itself is not at risk on a sportsbook’s own odds board.
The Legal Hook Is The Anti-Manipulation Rule
The letter does not rest on an event-contract rule. It rests on 7 U.S.C. Section 9, which makes it unlawful to use or attempt to use any manipulative or deceptive device in connection with a swap.
Commission Regulation 180.1 carries the same bar in three parts, reaching anyone who acts intentionally or recklessly to work a scheme to defraud, to state a material fact untruthfully or leave one out, or to run a course of business that functions as a deceit.
Staff added that the same duty appears in National Futures Association Compliance Rule 2-29, and that designated contract markets carry a separate obligation under Core Principle 12 of the Commodity Exchange Act to protect participants from abusive, noncompetitive or unfair actions by other parties to a transaction.
Copies went to CFTC General Counsel Tyler Badgley, Division of Enforcement Director David Miller and two National Futures Association officials.
A Cents Price And A Moneyline State Different Things
The objection turns on the difference between a sportsbook number and an exchange contract.
A moneyline states a payout. At -140, a winning bet returns $100 in profit on $140 at risk, and the break-even rate hidden inside that price is 58.3%. Turning a price into a probability is arithmetic the customer has to perform, the step at the center of betting odds explained.
A contract quoted at 40 cents states the probability first. It settles at $1 if the event happens, so the price is the market’s roughly 40% reading, and the payout, 60 cents of profit on 40 cents risked, is the number that has to be derived. In American terms that same contract is +150.
The CFTC’s second point is about what sits behind the price. An exchange price is set by competitive bidding among participants and, in most cases, an order book shows real-time bid and ask, so a trader can see depth and estimate price impact before trading. Staff contrasted that with casino-style bookmaking, where, as the letter puts it in a footnote, users “must accept the odds set by bookmakers who are financially interested in the outcome of every wager.”
Staff also wrote that participant confusion between the two products “could be exploited to drive participants into higher-margin, non-market-priced bookmaking products.”
What the letter reaches is the pricing screens of the prediction market apps that list sports event contracts under CFTC oversight, Kalshi among them.
Shown Only American Odds, Bettors Picked The Riskier Bet
The claim that odds format changes behavior is sourced in the letter to a single piece of research, American odds lead to riskier sports betting, published Aug. 4, 2025, by the Behavioural Insights Team with the Ohio Casino Control Commission.
The randomized trial put more than 4,000 U.S. participants in front of pairs of real, anonymized sportsbook wagers, with the odds shown in one of five formats: American, decimal, fractional, American plus implied win probability, and American plus implied loss probability. The American-odds-only arm went for the riskier of the two wagers at a significantly higher rate than every other arm, and bolting an implied win probability onto that same American price pulled the risky picks back down.
Shown only American odds, participants estimated their chance of winning a same-game parlay at an average of 53%. The implied probability of the parlay they were looking at was 4%.
Confirmations Are Due Aug. 31
The ask covers pricing displays, marketing material and any other information a regulated entity or its partners and affiliates put in front of users, with receipt to be confirmed by Aug. 31. Designated contract markets report to DMOLetters@CFTC.gov; introducing brokers and futures commission merchants report to MPDAlerts@CFTC.gov.
