Would The CFTC Actually Limit Or Ban Prop Bets And Parlays?
Roundup: Kalshi completes first bespoke block trade; Maryland governor bans state employees from prediction market insider trading.
This newsletter was sent to 3,673 subscribers who want to keep up with developments in the prediction market industry.
Front Office Sports’ Ben Horney did something few people have been able to accomplish: Get the head of the CFTC to say something interesting.
Most of what we have heard from Michael Selig, the chairman of the Commodity Futures Trading Commission, in recent months has followed familiar contours. Prediction markets are the greatest innovation in history. States are the Antichrist for trying to stop them. (I am paraphrasing and exaggerating a bit.)
But Horney got a sit-down with Selig and we got this:
He didn’t rule out changes that could include restrictions or even prohibitions on markets that mirror prop bets or parlays, “but that has to be done through rulemaking.”
Me when I (and some other people) read that:
I don’t think anyone expected Selig to give a sliver of daylight to the idea that sports event contracts could be reined in a little bit, let alone in such a material way. Props and (especially) parlays are the lifeblood of sports betting, with the latter becoming a huge part of Kalshi’s volume.
Of course, this passage from FOS is far from Selig saying props and parlays will be banned; it’s just leaving the door open a crack. I am skeptical that Selig and the CFTC (which is effectively just Selig, since he leads the agency and is the only commissioner) would seriously contemplate this idea:
It’s arguably a slippery slope to start trying to say which events shouldn’t be allowed, even via rulemaking.
Why would you prohibit parlays, for instance? Because they are too gamble-y? That would be a fine argument, but what other things could potentially fall in that category?
At the same time, if we’re going to have sports event contracts into perpetuity, it’s far easier not to laugh about the idea that they are “valuable financial instruments” if we got rid of parlays.
And I would have the same questions for prop bets on player performance. What’s the argument to limit or prohibit them? That they are subject to manipulation? These concerns exist in all sorts of markets outside of sports. That in small samples, they don’t have real economic impacts? Again, rinse and repeat with all sorts of markets.
It seems more defensible for the CFTC just to hold the line that an event is an event is an event and not try to parse what’s ok and what’s not (outside of war and assassination).
But politically — with all the different stakeholders involved — perhaps it could make sense to find some sensible limitations.
Selig has made it clear he is in the corner of prediction markets. And prediction markets clearly believe everything should be treated as an event that can be traded. The financialization of everything, and so forth. So would he really do something that could stymie growth?
We know that parlays (which are often built with player props!) are already a huge part of what’s happening at Kalshi, accounting for about a quarter of volume of late.
The prediction market industry may have a hard enough time holding the line under a potential Democratic administration, even without the precedent of reining in certain markets through rulemaking.
In any event, Selig even acknowledging there could be limits on sports event contracts is interesting. But it’s also still far from becoming reality.
You can’t pause current events when your payments can’t keep up. With every failed deposit or lengthy withdrawal process, customers lose trust in your brand. And when money doesn’t move fast enough, your liquidity suffers. PayNearMe’s PayXMTMplatform is purpose-built for Payment Experience Management, giving you the fast, familiar payment options your customers want while streamlining back-end operations for your team. Get real-time payments for real-time events—from one simple integration.
Prediction markets roundup
🚨 The important stuff
Kalshi Completes First Block Trade, Backed by Jump Trading (Bloomberg): “Kalshi Inc. said it has completed its first ever bespoke block trade, with Jump Trading providing liquidity for the prediction market exchange.”
“The transaction was brokered this month by Greenlight Commodities on behalf of a Houston-based environmental hedge fund, which sought access to a contract tracking whether a specific price will be realized at a May auction of carbon allowances in California. The contract was created and certified specifically for that trade, Kalshi said in a statement on Monday, with market maker Jump providing liquidity on the opposite side.”
“The block trade was a six-figure sum, making it far smaller than those typically seen in traditional finance. Still, having the capacity to broker such deals will likely make prediction markets more appealing to institutional investors who need to deploy much larger amounts of capital than Kalshi’s current base of retail clients.”
Kalshi CEO Tarek Mansour:
Tarek Mansour@mansourtarek_The historical bottleneck for institutional risk transfer is liquidity. The bottleneck for liquidity is having a price benchmark for each relevant risk (eg. WTI for oil). Kalshi has built a large community of superforecasters who are the best in the world at pricing risk. This
8:33 PM · Apr 27, 2026 · 58.9K Views17 Replies · 39 Reposts · 198 LikesKalshi co-founder Luana Lopes Lara said Kalshi was already doing block trades at its research conference, but perhaps “bespoke” is doing some lifting here:
Kalshi Research@KalshiResearchKalshi founder on institutional adoption: "Block trades are already live on the platform...Right now a trade that we're seeing a lot is in the $20-30 million range for payroll hedging"5:27 PM · Apr 7, 2026 · 1.32M Views76 Replies · 73 Reposts · 1.12K Likes
Trump Walks Back Prediction Market Criticism, Says ‘Smart People’ He Knows Like Them (Decrypt): President Donald Trump appeared to walk back criticism of prediction markets over the weekend, suggesting he wasn’t yet sure where he stood on the matter or whether he’d prefer if the emerging sector were regulated differently. …
But on Saturday, Trump seemed to retract his critique, saying he wasn’t sure where he stood on the subject—and arguing some “very smart” people believe the novel sector is worth supporting.
“Well, I don’t know,” Trump said when asked by Decrypt about his prior statements critical of prediction markets. “I know some people that are very smart. They like it, they disagree.”
Billionaire’s Bid to Offer Kalshi in Brazil Is Snarled by Ban (Bloomberg): “Kalshi’s partnership with XP allows some users to make yes-or-no bets on economic events tied to Brazil. Those wagers are handled through XP’s interface and through the company’s US-based brokerage arm rather than through Kalshi’s now-banned website. XP declined to comment. It’s possible that the partnership will still go ahead, given the exceptions announced by the Brazilian government.”
⚖️ Legal and regulatory news
Moore bans insider bets on prediction markets by state workers amid new scrutiny (Baltimore Banner): Gov. Wes Moore signed an executive order Friday banning state employees from using insider information to place bets with prediction market apps.
“The citizens of Maryland deserve a government where State business is conducted truthfully and honestly, free from the existence or perception of any corruption or misconduct,” the order said.
A new bill in Ohio would seek to treat sports event contracts like sports betting: You can see the bill here.
Kalshi Unable to Stop Ohio From Enforcing Sports Gambling Laws (Bloomberg Law): “This split of authorities leaves no doubt that Kalshi has raised serious questions on the merits,” the panel wrote. “At least at this stage, though, we find the preemption arguments largely in equipoise (if not favoring Ohio).”
“But even if they assumed federal law covers event contracts, the appeals judges said Kalshi’s arguments aren’t enough to prove that federal law overrides Ohio’s in this instance. Other factors also don’t weigh in Kalshi’s favor, they said.”
📣 Industry news
FanDuel Is Playing Catch-Up on Prediction Markets (Bloomberg): “FanDuel Predicts’ rollout has been a mixed bag. On one hand, downloads of the app swelled at the height of the US college basketball tournaments in March, when the company began offering a $25 bonus for new accounts with no deposit required. The app briefly topped Kalshi at more than 57,000 downloads a day, according to data from market researcher Apptopia. …”
“But since that initial spurt of interest, downloads have fallen to roughly 7,000 daily, putting FanDuel behind Kalshi, Polymarket and PrizePicks in the prediction category.”
DAZN Applies For NFA Membership To Offer Prediction Market Contracts (InGame): “Sports streaming platform DAZN could be set to offer prediction market contracts in the U.S. soon, from an exchange like Polymarket U.S., after it applied to join the National Futures Association (NFA) as an introducing broker.”
Confirmation from NBA Commissioner Adam Silver of an earlier report by Front Office Sports that the league is in talks with the CFTC and prediction markets:
Bill Speros@billsperos🚨BREAKING: @NBA in talks with @CFTC about a "memorandum of understanding" similar to one MLB signed earlier this year. Commissioner Adam Silver also said the league is in talks with prediction markets like @Kalshi @Polymarket but does not yet have a deal. STORY TO COME5:58 PM · Apr 27, 2026 · 31.3K Views2 Replies · 5 Reposts · 27 LikesPolymarket announcement:
Polymarket Traders@PolymarketTradeWe're excited to announce $1 million in liquidity rewards for CLOBv2 migration day tomorrow. $500K for the first 2 hours after migration — & another $500K for the rest of the day. Rebates/fees will be enabled on all eligible markets post-migration, per:docs.polymarket.comFees - Polymarket Documentation8:04 PM · Apr 27, 2026 · 50K Views57 Replies · 34 Reposts · 307 LikesMore social features from Kalshi:
Kalshi@KalshiKalshi just got an upgrade. New profiles. Personalized feeds. Inner circles. Enjoy trading with your friends 🤝
4:53 PM · Apr 24, 2026 · 228K Views54 Replies · 38 Reposts · 440 LikesIt feels like this is constantly something people are trying to do in gambling and finance, but it’s not clear this is an unlock for retention.
📖 Everything else you should know/read
Gambling by Another Name (WSJ): “If it walks and quacks like a casino, it’s a casino. Yet the federal Commodity Futures Trading Commission insists that it has jurisdiction over prediction markets, which overrides state laws that prohibit or regulate gambling. That’s dumb.”
“Despite the semantics, you don’t even trade ‘shares’ on prediction markets, but instead trade ‘swaps’ as defined in the ill-considered Dodd-Frank Act of 2010. Calling them ‘swaps’ avoids state regulation and stricter insider-trading laws. If anything, these event contracts are more like options than futures or swaps. But really, they’re bets.”
Prediction markets prepare to invade one of crypto’s biggest and riskiest trades (CNBC): “The convergence of prediction markets and leveraged trading could reshape how Americans trade on real-world events. It would also bring prediction markets into direct competition with platforms such as Robinhood and Coinbase, and lead skeptics to question whether combining prediction markets with leveraged products would heighten volatility and more closely link crypto to mainstream finance. For the incumbent crypto platforms themselves, however, analysts have largely downplayed any potential risks posed by challenges from the predictions markets.”
Everything Is Commodities Fraud (Bloomberg, Matt Levine): “If this guy had done insider trading on Kalshi, he would clearly have been insider trading commodity futures, and so he would clearly be in trouble. But Polymarket is not a commodities market registered with the CFTC, so why is it commodities fraud to do insider trading on Polymarket?”
“Well, you know, substance over form. If an event contract on Kalshi is a commodity futures contract, then any event contract is a commodity futures contract; if it’s illegal to insider trade a CFTC-registered event contract then it’s also illegal to insider trade an unregistered one. In legal terms, an event contract is a type of ‘swap,’ and the notion of a ‘swap’ is extremely broad.”
Kalshi Says Bitcoin Payments and Prediction Markets Are Building a New Exchange for Big Money (Bitcoin Magazine): “Kalshi’s head of crypto, John Wang, used a Bitcoin 2026 fireside chat to argue that regulated prediction markets offer a more accessible way to trade Bitcoin than traditional spot venues. He opened by describing his path at Kalshi and pushed back on the idea that the exchange is a pure crypto platform, saying Bitcoin and other digital assets serve as key payment rails rather than its core product.”
Another Substack:
The block trade with Jump and the parlay question belong in the same paragraph. Kalshi is trying to be a bespoke institutional derivatives exchange and a consumer sports gambling app simultaneously. Selig restricting parlays wouldn't stymie growth so much as force a choice between two business models that undermine each other's regulatory story. A six-figure carbon allowance contract brokered by Jump looks a lot more like a "valuable financial instrument" when it isn't sharing a platform with NBA player prop parlays. Sometimes the regulator who trims the product is doing more for your long-term positioning than the one who lets you do everything.