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Crypto.com is potentially coming under fire from the Commodity Futures Trading Commission (CFTC) for allowing investors to bet on major football games, including the Super Bowl.
According to Bloomberg, the commission is voting on a proposal to subject contracts that might violate gaming laws to a 90-day review. However, the CFTC does not have the power to immediately halt trading and its decision would only come after the Super Bowl this year, scheduled for 9 February.
The contracts, listed on Crypto.com’s Chicago-based derivatives exchange, underwent a last-minute submission process, with the exchange notifying the CFTC of its intentions just before Christmas. This left the agency little time to evaluate the legality of the product.
Crypto.com’s contracts, tied to National Football League and college football outcomes, avoid direct references to game names on public platforms but clearly display team names and outcomes in its app.
“It is disappointing that the current and imminently departing CFTC leadership would consider this action while not allowing the incoming CFTC leadership to determine how free markets operate under its administration,” a Crypto.com spokesperson said.
🆕 US users, new championships have arrived in https://t.co/vCNztATSCO Sports
— Crypto.com (@cryptocom) January 7, 2025
Potentially Profit when you correctly predict the outcome of:
⭐ Pro Football Conference Championships
⭐ Bowl Games
⭐ College Football Championship pic.twitter.com/l4oaMZhrd7
Crypto.com's model varies from traditional sports betting firms like DraftKings by pairing traders on either side of the bet while imposing a small fee, rather than setting odds. The exchange also offers nationwide access across the US, which circumvents state-by-state restrictions that govern sports betting.
In a first for the industry, the sports event trading platform, essentially a prediction market, allows U.S. users to trade predictions on sports outcomes. Initially, the platform focuses on the upcoming Super Bowl, enabling users to forecast game results and interact with a unique trading interface.
Its contracts cap individual bets at $250,000 in notional value, with market makers allowed up to $25 million.
Blockhead
This product draws similarities to existing event contracts offered by Crypto.com’s CFTC-regulated derivatives exchange. The launch positions Crypto.com at the forefront of integrating cryptocurrency with sports, aiming to leverage the Super Bowl's immense popularity to gain traction among new and existing users.
A ruling ahead of the US elections in November offered legal clarity for event contracts, according to Crypto.com.
“Having CFTC oversight of this brings, of course, federally regulated market integrity, manipulation controls and product availability in all 50 states,” Crypto.com’s Chief Legal Officer Nick Lundgren said.
“You’re going to see that line being blurred between what is legal, what’s illegal, what’s permitted, what’s impermissible,” CFTC Chairman Rostin Behnam said. “I think that diverts very far away from the origins at the heart of what the CFTC does and what derivatives markets are meant to be.”
Current CFTC Chairman Rostin Behnam, a skeptic of such contracts, is set to step down in February. The incoming administration may adopt a friendlier stance, potentially paving the way for broader adoption of event-based prediction markets.
