Kalshi self-certifies CFTC sports event contract tied to draft lottery odds
Prediction market Kalshi has taken another step into sports-linked trading. The New York company recently self-certified a new set of event contracts with the U.S. Commodity Futures Trading Commission, tied to professional sports draft lottery odds, testing how far federally regulated prediction markets can go.
Earlier this month, Kalshi filed paperwork with the CFTC to list contracts built around the question: Will a specific team win its league’s draft lottery? The company also introduced contracts based on the pre-draw odds for the eventual winner. By using the agency’s self-certification pathway, Kalshi suggests that the products “comply with the Act and Commission regulations thereunder,” as required under the Commodity Exchange Act.
The process allows a designated contract market to roll out new event contracts without waiting for formal signoff. Unless the CFTC objects within a set review window, the contracts can begin trading. Kalshi relied on that same mechanism earlier in 2025 when it expanded into sports-related markets, including contracts linked to college basketball outcomes.
CFTC signals new direction on event contracts as Kalshi self-certifies draft lottery odds
The draft lottery filings arrive during a major change in tone at the CFTC. Under Chairman Michael S. Selig, the agency has moved away from the more restrictive posture it took in 2024. In recent weeks, the commission withdrew a proposed rule that would have imposed sweeping limits, and potentially outright bans, on event contracts involving sports and politics.
In a formal statement, Selig said the earlier proposal “reflected the prior administration’s frolic into merit regulation with an outright prohibition on political contracts,” and made clear he wants a different approach. He said the agency would pursue new rulemaking “grounded in a rational and coherent interpretation of the Commodity Exchange Act that promotes responsible innovation in our derivatives markets in line with Congressional intent.”
The Commission also rescinded a 2025 staff advisory that had urged caution around sports-related contracts while litigation played out. Selig said the advisory “inadvertently created confusion and uncertainty for our market participants.”
At the same time, the chairman has directed CFTC staff to coordinate with the Securities and Exchange Commission on clarifying how federal law draws the line between commodity derivatives and security-based instruments.
Kalshi has long argued that its markets are federally regulated derivatives, not sports wagers subject to state gaming laws. The position has sparked clashes with regulators in states including New Jersey and Nevada, where cease-and-desist orders have questioned whether the contracts amount to illegal gambling. Some federal courts have sided with the view that the CFTC’s authority over designated contract markets can preempt certain state actions, though litigation remains ongoing.
Industry supporters have cheered the agency’s pivot. The Coalition for Prediction Markets wrote on social media, “We applaud Chairman Selig’s statements that the CFTC has ‘the expertise and responsibility to defend its exclusive jurisdiction’ over event contracts.”
Critics, however, say contracts tied to lottery outcomes push prediction markets closer to pure games of chance. They argue that expanding into that territory could blur the boundary between financial hedging tools and gambling, raising concerns about manipulation and state oversight.
Featured image: Kalshi / Canva
The post Kalshi self-certifies CFTC sports event contract tied to draft lottery odds appeared first on ReadWrite.