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Prediction markets could begin appearing in more third-party apps under a new CFTC no-action position, but the change will not reopen sports-event contracts currently blocked in Michigan.
The Commodity Futures Trading Commission announced the no-action position on Sept. 17. Its Market Participants Division said qualifying providers of “passive” software can connect customers with federally registered exchanges without registering as introducing brokers.
The relief expressly includes software that provides access to event contracts. It could allow more third-party apps to add prediction markets instead of requiring customers to visit an exchange’s own platform.
For Michigan residents, the key point is that the CFTC addressed only a federal registration requirement for software providers. It did not decide whether sports-event contracts must comply with Michigan gambling laws.
Michigan’s current court restrictions specifically concern sports-event contracts. The CFTC relief is broader and also covers software providing access to other event contracts and CFTC-regulated derivatives.
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.
An event contract generally lets a customer take a position on whether a particular outcome will occur. Contracts tied to sporting events can therefore resemble traditional bets, although the CFTC defines event contracts as derivatives.
Software providers can offer access through a stand-alone product or build it into an existing app. That could allow customers to view and trade event contracts without visiting a prediction market exchange’s own 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 the routing or execution of orders and must satisfy the CFTC’s disclosure and compliance requirements.
The relief will remain in place until the agency adopts rules or guidance addressing registration requirements for software developers.
Kalshi and Robinhood sports contracts remain blocked
The CFTC action does not change what Michigan customers can currently access.
An Ingham County judge granted a preliminary injunction against Kalshi in September. The order requires Kalshi to use a Michigan Gaming Control Board-licensed geolocation provider to prevent anyone physically located in Michigan from accessing its sports-event contracts.
Kalshi could face a $500,000 penalty for each day the court finds that it failed to comply with the order’s geolocation requirements.
Robinhood also agreed to stop offering new sports contracts to Michigan customers under a separate court-approved agreement. The company must close any remaining customer positions by Oct. 9.
Federal-state dispute remains unresolved
Michigan officials consider contracts based on sporting outcomes to be sports wagers, regardless of whether a company describes them as trades. They argue that operators must obtain an MGCB license and follow the same requirements as legal Michigan sportsbooks, including a minimum age requirement of 21 and state consumer protections.
Kalshi and Robinhood maintain that event contracts traded on federally regulated exchanges fall under the CFTC’s authority instead. Courts around the country have reached different conclusions, and the broader dispute remains unresolved.
The latest CFTC action could give prediction markets more ways to reach customers nationally, but it does not override Michigan’s court orders. Michigan users could eventually see event contracts added to more apps while still finding sports-related markets unavailable because of their location.
For now, Michigan residents looking to wager on sports online must continue using an MGCB-authorized sportsbook. The CFTC’s no-action position does not reopen the sports markets currently blocked in the state.
