The Commodity Futures Trading Commission has told prediction-market operators Novig and ProphetX not to list a set of sports event contracts the two companies had already self-certified, according to Front Office Sports. The agency also asked both firms to explain how the markets would comply with federal commodities law.
A CFTC spokesperson confirmed that letters had been sent to both companies. “Any derivatives contract offered by a CFTC-regulated exchange must be compliant with the Commodity Exchange Act,” the spokesperson said.
Micro contracts and scorigami
The two letters target different products. Novig was told that its micro contracts, such as a market on which player scores the first points in a basketball game, are susceptible to manipulation. ProphetX was told that its scorigami contracts, which pay out when a game ends with a final score never seen before in that sport, do not meet the Commodity Exchange Act’s definition of a swap.
Sources told Front Office Sports that the letters describe the filings as false self-certifications, the term used when an exchange certifies a contract that may not be permitted under the statute. Neither set of contracts had been listed, so no customer has traded on them.
ProphetX framed the request more narrowly. A company spokesperson said CFTC staff “requested that we voluntarily defer listing the Scorigami contracts pending further review, not that we withdraw them.” The company said it complied, has since supplied further analysis on the contracts’ compliance and economic utility, and remains in contact with agency staff. Novig did not immediately respond to a request for comment, the outlet reported.
A signal to the wider market
Under the current framework, exchanges can self-certify and list new contracts without prior approval, and the CFTC can step in afterward. The agency declined to say whether this is the first time it has told an operator to hold back a self-certified sports contract. One source described the letters as “kind of a warning shot” for the sector.
The move does not appear to be limited to two companies. Senior CFTC officials have also spoken with DraftKings and FanDuel and warned them they could face similar action if they list micro contracts, according to the report. Other exchanges have voiced frustration with the agency’s stance, pointing out that many state regulators allow comparable in-game wagers at licensed sportsbooks.
The letters follow a separate round of CFTC inquiries last month into incentive programs at Kalshi, Polymarket, Rothera and Novig. They also come ahead of a final rule the agency is expected to issue after its June proposal, a 267-page notice that would restrict in-game props and limit markets on high school sports. The proposal sits inside a wider dispute over how sports contracts are treated under federal rules, with several states arguing those products should fall under gambling law.
Leagues have pushed for limits
One source said the Novig and ProphetX markets were the kind of event contracts that drew the most negative feedback from professional leagues. On October 19, the NBA restricted the player props and micro bets its sportsbook partners can offer, including wagers on which player scores a game’s first basket, Yogonet reported. Those league rules cover traditional sportsbooks, not prediction markets.
It is not clear what the CFTC would do if either company went ahead and listed the contracts. Both firms have the chance to make their case to the agency, and the outcome is likely to shape how far other exchanges push into single-play sports markets before the final rule lands. Sports already account for most of the activity on the largest platforms, as shown in recent data on NFL trading volume across prediction markets.
The post CFTC Tells Novig and ProphetX to Hold Back Micro and Scorigami Contracts appeared first on ReadWrite.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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