- CFTC staff said pricing event contracts in bookmaker-style American odds is likely to mislead traders about the transaction.
- A contract quoted at 62 cents implies a 62% market probability, while American odds render the same price as -163.
- Staff expect exchanges to ensure the brokers, affiliates and partners carrying their prices meet the standard.
- Staff grounded the warning in Commission Regulation 180.1, which bars untrue or misleading statements of material fact.
WASHINGTON – Commodity Futures Trading Commission staff told the exchanges and brokers that handle event contracts that pricing those products in bookmaker-style American odds is likely to mislead traders about what they are buying. The letter, released Aug. 7, asked recipients to review their pricing displays and confirm receipt by Aug. 31.
What Changes On An Election Market Screen
Contract prices on a CFTC-regulated exchange are quoted in cents on the dollar, and the cent figure is the implied probability. A contract on a Senate seat trading at 62 cents settles at $1 if the outcome happens, so the price sets the market’s implied probability at 62% outright. The payout, 38 cents of profit on 62 cents at risk, is the number that has to be derived.
American odds reverse the order. Quoted at -163, the same contract states the payout and leaves the 62% to be calculated. That cents figure is what makes a US election odds tracker readable as a forecast rather than a betting board.
The divisions treated the difference as a product question rather than a formatting preference. A derivative’s price is settled between two counterparties by the market itself, the staff letter on misleading or deceptive practices said, which leaves a venue listing event contracts with no “control over contract prices.” Competitive bidding among participants sets the number, and an order book usually carries live customer bids and asks alongside it.
Staff Credited Prediction Markets With Price Discovery
Staff went further and credited the format itself. Prediction markets “leverage transparency to aggregate the collective knowledge of its user base, serving important price- and information-discovery functions,” the letter said.
Odds-format displays, the letter said, “may deprive users of access to indicia of market depth and pricing impact.” Staff went on to warn that “market participant confusion between the two products could be exploited to drive participants into higher-margin, non-market-priced bookmaking products.” On a market such as 2026 Senate odds, the cents price carries the market-depth and pricing-impact information the letter says an odds display may withhold.
The Duty Extends To Affiliates And Partners
The letter names no exchange and no company. Its addressee line covers every entity the CFTC regulates, plus their affiliates. It came from the Division of Market Oversight and the Market Participants Division, over the signature of DJ Hennes, director of the Market Participants Division and acting director of the Division of Market Oversight.
Staff grounded the warning in 7 U.S.C. Section 9, which makes it unlawful to use any manipulative or deceptive device in connection with a swap, and in Commission Regulation 180.1, which bars untrue or misleading statements of material fact.
The letter pointed to a disclosure obligation specific to exchanges. Under 17 CFR Section 38.401(b), a designated contract market has to give out information it believes to be accurate and complete, and cannot leave out anything material. National Futures Association Compliance Rule 2-29 imposes a parallel duty.
The obligation does not stop at the exchange. The divisions said they expect a designated contract market to hold its intermediaries, affiliates and partners to the same line, and told those firms to look at the rest of their marketing and informational practices, not the price display alone.
Conduct at the venues has drawn separate federal and exchange scrutiny this year, including Polymarket and Kalshi’s first insider trading reckoning in May.
The Research In The Footnote
One footnote carries the behavioral claim. Staff cited research on American odds and risk-taking published Aug. 4, 2025 by the Behavioural Insights Team, a randomized trial of more than 4,000 U.S. participants shown identical wagers in five formats.
The arm that matters for a cents-denominated exchange is the corrective one. Attaching an implied win probability to American odds reduced how often participants picked the riskier bet, which is the information a contract price states by default.
