CFTC Tells Novig And ProphetX To Hold Micro And Scorigami Contracts

The contracts at issue have been self-certified but not yet listed, so nobody can trade them. 

Novig was told that micro contracts, such as who will score the first points in a basketball game, are susceptible to manipulation. 

ProphetX was told that its scorigami contracts do not meet the definition of a swap under the Commodity Exchange Act.

A scorigami occurs when a game ends on a final score that has never happened before in the history of that sport. 

Sources told Front Office Sports the letters describe the filings as false self-certifications. Both firms get the chance to explain why the markets should be allowed.

The CFTC spokesperson said any derivatives contract offered by a CFTC-regulated exchange must comply with the Commodity Exchange Act. 

The agency said its rejection of micro trades reflects a broader commitment from Chairman Michael Selig to protect consumers from potential fraud or manipulation.

ProphetX said agency staff asked it to voluntarily defer listing the scorigami contracts pending further review, not to withdraw them. 

It said it complied, has since provided more analysis on regulatory compliance, and remains in contact with staff. Novig had not responded to Front Office Sports when the story ran.

Sources described the letters as part of a broader cleanup by Selig ahead of the CFTC's final rulemaking on prediction markets. 

In June, the agency issued a 267-page proposed rule that would restrict in-game props, such as the next pitch and limit markets on high school sports.

Front Office Sports also reported that senior CFTC officials have told companies, including DraftKings and FanDuel, that they risk similar action if they list micro contracts. 

Last month, the agency sent letters to platforms including Kalshi, Polymarket, Rothera and Novig about incentive programs and possible misleading promotions.

Front Office Sports said professional leagues have given the most negative feedback on such markets. 

The NBA restricted last week the player props and micro bets that its sportsbook partners can offer, including bets on who scores the first basket. 

Those limits apply only to traditional sportsbooks, not prediction markets.

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Some other exchanges have voiced frustration to the CFTC, the report said, because many state-level gambling regulators allow such wagers.

It is unclear what the CFTC would do if the companies list the contracts anyway. 

Watch for the firms' responses, any similar letters to other operators, and the final rule. For wider coverage, see our US gambling news.