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Prediction markets could begin appearing in more third-party apps under a new Commodity Futures Trading Commission (CFTC) no-action position.
The CFTC’s Market Participants Division announced the decision on Sept. 17. Under the position, qualifying providers of “passive” software can connect customers with federally registered exchanges and intermediaries without registering as introducing brokers.
The relief expressly includes software that provides access to event contracts. It could allow more outside apps to add prediction markets instead of requiring customers to visit an exchange’s platform.
For New Jersey residents, the key point is that the CFTC addressed a federal registration requirement for software providers. It did not resolve whether sports-event contracts must comply with state gambling laws. A federal appeals court has blocked New Jersey from enforcing those laws against Kalshi while its case proceeds.
Third-party apps could add event contracts
Under CFTC Staff Letter 26-25, eligible software can allow customers to review market information, view available contracts, and send orders directly to a registered exchange or intermediary.
Providers may also market the software under the letter’s stated conditions.
An event contract lets a customer take a position on whether an outcome will occur. Sports-event contracts can therefore resemble traditional bets, although the CFTC classifies event contracts as derivatives.
Providers can offer access through a stand-alone product or embed it into an existing software interface, allowing customers to trade without visiting an exchange’s platform.
CFTC relief comes with limits
The decision is not blanket approval for any app to begin offering prediction markets.
A no-action position means CFTC staff will not recommend an enforcement case over a provider’s failure to register as an introducing broker if it follows the letter’s requirements. It is not a license, a new law, or a final ruling on other federal or state requirements.
Qualifying providers must remain passive, cannot hold customer assets or control order routing or execution and must meet disclosure and compliance requirements. The relief will remain until the agency adopts rules or guidance for software developers.
New Jersey remains unable to block Kalshi sports contracts
The New Jersey Division of Gaming Enforcement ordered Kalshi to stop offering sports contracts in March 2025.
The DGE called them unauthorized sports wagering, including contracts involving New Jersey college teams or collegiate events held in the state, which licensed sportsbooks cannot offer.
Kalshi secured a preliminary injunction preventing the state from enforcing its gambling laws against the exchange.
In April, the Third Circuit Court of Appeals upheld that injunction. The majority found that Kalshi had a reasonable chance of proving its sports-event contracts are federally regulated swaps and that federal law pre-empts New Jersey’s attempt to regulate trading on its CFTC-licensed exchange.
The decision was not a final ruling on the case. It allows Kalshi’s sports-event contracts to remain available in New Jersey while the litigation continues. New Jersey has asked the U.S. Supreme Court to review the Third Circuit’s ruling.
Federal-state dispute remains unresolved
New Jersey officials consider contracts based on sporting outcomes to be sports wagers, regardless of whether a company describes them as trades. They argue that operators should obtain state approval and follow the same requirements as legal New Jersey sportsbooks, including a minimum age of 21 and state consumer protections.
Kalshi maintains that event contracts traded on its federally registered exchange fall under the CFTC’s exclusive authority. Courts around the country have reached different conclusions, leaving the broader regulatory question unsettled.
The CFTC action does not change which contracts New Jersey customers can access. It could give regulated exchanges more ways to reach them through outside apps.
Kalshi can continue offering sports-event contracts in New Jersey without a state sports wagering license. Whether New Jersey can eventually require those products to follow its gambling laws may depend on the outcome of its Supreme Court petition.
