Meta description: CFTC staff warned exchanges against broad event-contract filings as New York and Michigan courts tested Kalshi and sports markets.
Tags: CFTC, Kalshi, Polymarket, Robinhood, New York Gaming Commission, Michigan Gaming Control Board
market_platform: none-if-cross-platform
category: Regulation
The Commodity Futures Trading Commission’s latest verified prediction-market action is not a ban on sportsbook-style odds. It is a July 24 advisory telling designated contract markets to stop using broad, template-style event-contract self-certifications when the filings do not give staff enough detail to evaluate settlement methods, data sources and core-principles compliance.
The advisory came as the CFTC and state gaming regulators were already fighting over the same threshold question: whether federally regulated event contracts can be treated as derivatives even when the underlying event looks like sports betting, election betting or another state-regulated wager. Court records and agency statements show no single national answer yet. The legal map is being built case by case.
What did the CFTC actually say on July 24?
The CFTC’s Division of Market Oversight issued a July 24 advisory on self-certification of event contract series. The advisory reminded designated contract markets that Commission Regulation 40.2 requires enough information, explanation and analysis for staff to evaluate a proposed contract before it is listed.
The specific target was the practice of bundling many possible event-contract variations into one broad filing. The CFTC said that approach can limit the Division of Market Oversight’s ability to assess whether a market has adequately analyzed settlement methodology, data sources and compliance with the CFTC’s core principles. The advisory said broad, template-style certifications should not be submitted, while also explaining when closely related event contracts may be certified as a class or submitted for approval under Regulations 40.2(d) or 40.3.
That matters because event contracts often rely on a simple structure: a yes-or-no claim pays $1 if the event happens and $0 if it does not. The price between $0 and $1 functions as the market’s implied probability before fees and spreads. A contract trading at 40 cents suggests roughly a 40 percent market-implied chance. But the CFTC’s July 24 advisory was about the regulatory filing process for those contracts, not the consumer-facing display of prices.
Why does self-certification matter for prediction markets?
Self-certification is the mechanism that lets a designated contract market list a product by certifying to the CFTC that the product complies with the Commodity Exchange Act and commission rules. For prediction markets, that process has become a core battleground because operators want speed and scale, while regulators want enough detail to decide whether a contract fits within federal derivatives law.
The July 24 advisory narrows the room for exchanges to submit generic frameworks covering many possible outcomes without contract-level detail. For a market operator, that can slow product launches or force more precise filings. For the CFTC, it preserves review capacity at a moment when event contracts are expanding from elections and economics into sports, culture and other retail-facing categories.
The filing issue also connects directly to state litigation. States have argued that some event contracts are functionally sports wagers or gambling products. The CFTC has argued that registered contract markets fall under federal law when they list event contracts as derivatives. More detailed self-certification records give the CFTC and courts a clearer paper trail for deciding whether a contract is a federally regulated derivative, a state-regulated wager or something that triggers both sets of claims.
What is the CFTC’s position against New York?
On April 24, the CFTC filed suit in the U.S. District Court for the Southern District of New York to stop New York from applying state gambling laws against CFTC-registered contract markets. In its own press release, the agency said New York had used cease-and-desist letters and civil enforcement suits against CFTC-registered entities, and that the commission was seeking a declaratory judgment that federal law gives it exclusive authority over event contracts.
CFTC Chair Michael S. Selig framed the case as a jurisdictional fight over federally registered markets. The agency’s April 24 release quoted Selig saying that CFTC-registered exchanges had faced state lawsuits seeking to limit access to event contracts and undermine the agency’s jurisdiction over prediction markets. The same release said the New York action followed similar CFTC lawsuits in Arizona, Connecticut and Illinois.
New York has taken the opposite view. On July 8, New York Attorney General Letitia James and Governor Kathy Hochul said Kalshi had lost its lawsuit against the New York Gaming Commission. Their statement described the case as a victory for New York gambling law and said prediction markets were included in the state’s enforcement position.
What happened in Michigan?
Michigan has also treated sports-related prediction contracts as an unlicensed-gaming issue. On June 30, the Michigan Gaming Control Board said the Ingham County Circuit Court had granted a temporary restraining order against KalshiEX, LLC, barring the company from offering unlicensed internet sports betting to Michigan residents.
The Michigan board said the order was signed by Judge Rosemarie E. Aquilina and imposed fines of $120,000 per day for noncompliance. According to the board, the order required Kalshi to stop offering, advertising or facilitating internet sports betting to people located in Michigan and to use state-compliant third-party geolocation technology.
The Michigan statement also cited related federal-court losses for Polymarket and Robinhood. The board said U.S. District Judge Paul Maloney had denied requests by those companies for preliminary injunctions that would have blocked Michigan from enforcing its gambling laws against sports-related prediction contracts. That is a narrower point than a final ruling on the entire sector, but it shows why state regulators are continuing to press the gambling-law theory while federal litigation proceeds.
How did Kalshi’s 2024 court win shape the current fight?
Kalshi’s key federal-court win came on September 12, 2024, in the U.S. District Court for the District of Columbia, not from a 2023 appellate ruling. In KalshiEX LLC v. Commodity Futures Trading Commission, Judge Jia M. Cobb granted Kalshi’s motion for summary judgment and denied the CFTC’s cross-motion in a case over congressional-control contracts.
The court held that Kalshi’s congressional-control contracts did not involve unlawful activity or gaming under the Commodity Exchange Act’s special rule. Judge Cobb wrote that the contracts involved elections, politics, Congress and party control, but did not involve unlawful activity or any game. The ruling vacated the CFTC’s order that had barred Kalshi from listing those contracts.
That decision helped open the door for more aggressive event-contract listings, but it did not resolve every later dispute. The D.C. case concerned congressional-control contracts and the CFTC’s interpretation of its own special-rule authority. The state cases now moving through New York, Michigan and other jurisdictions raise a different preemption question: whether state gambling regulators can enforce their own laws against federally registered platforms when the products resemble sports or other wagers.
Does this affect Fed decision markets?
Economic contracts remain part of the same event-contract ecosystem, but they sit in a different political and legal posture from sports contracts. Kalshi’s public Fed category shows markets tied to Federal Reserve decisions, rate cuts, rate hikes, dissenting votes and September dot-plot publication. Those contracts are framed around monetary-policy outcomes rather than sports contests.
The next scheduled Federal Open Market Committee meeting is September 15-16, according to the Federal Reserve’s published 2026 meeting calendar. The September meeting is also marked as a meeting associated with a Summary of Economic Projections. That date gives economic prediction markets a clear near-term resolution point, separate from the state-level sports-betting fights.
For the CFTC, the distinction matters. A Fed decision contract raises questions about settlement sources, market integrity and contract design. A sports contract raises those issues too, but also collides with state licensing, tax and consumer-protection regimes for gambling. The July 24 self-certification advisory applies to how designated contract markets submit event-contract filings to the federal regulator. It does not settle the state-law question.
What comes next?
The immediate regulatory milestone is the CFTC’s implementation of the July 24 self-certification advisory through its review of new event-contract submissions. Designated contract markets now have clearer staff guidance that broad, template-style filings are disfavored when they obscure contract-specific analysis.
The legal milestones are in court. The CFTC’s Southern District of New York case against state officials will test the agency’s preemption theory. New York’s July 8 statement and Michigan’s June 30 order show that state regulators are not waiting for a single national rule before enforcing gambling statutes. The September 15-16 FOMC meeting will test economic markets on a separate track, while sports-related contracts remain the sharpest jurisdictional fight for prediction-market operators.
