CFTC asks Novig and ProphetX to hold off listing sports micro and scorigami contracts, questioning whether federal law allows them

The CFTC has told two registered prediction-market exchanges to hold off on sports contracts it doubts are lawful. Letters sent this week ask Novig and ProphetX not to list contracts they had self-certified and to explain why those markets comply with federal commodities law, according to Front Office Sports, which first reported it on October 22, and Legal Sports Report.

Novig's contracts are "micro" markets, such as which player will score the first points in a basketball game, which the CFTC said are susceptible to manipulation, per Front Office Sports. ProphetX's are scorigami contracts, which pay out when a game finishes with a score never seen before in that sport; the agency told ProphetX they do not meet the Commodity Exchange Act's definition of a swap, per Front Office Sports. Neither set has been listed, so users cannot trade them.

A CFTC spokesperson confirmed the letters and said, "Any derivatives contract offered by a CFTC-regulated exchange must be compliant with the Commodity Exchange Act." ProphetX said the agency's staff asked it to defer listing the scorigami contracts pending review rather than withdraw them, that it complied and that it has since given staff more analysis. Novig did not immediately respond to Legal Sports Report. Sources told Front Office Sports the letters describe the self-certifications as false and that senior CFTC officials told DraftKings and FanDuel they risk similar action if they list micro contracts; the spokesperson's statements did not address those details.

What happens next: both exchanges can make their case to the agency. SBC Americas noted that the CFTC's proposed prediction-markets rulemaking says some in-game, prop-style markets may not serve the public interest or meet the law's requirements.