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The US Commodity Futures Trading Commission (CFTC) is looking into Crypto.com's sports wager offerings through contracts.
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.
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“We are continuing to review the contracts in accordance with our regulations,” a CFTC spokesman told Bloomberg on February 3.
Currently led by Commissioner Caroline Pham, the CFTC does not have the authority to immediately halt trading of these contracts. Its decision would only come after the Super Bowl this year, scheduled for 9 February.
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 US 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.
Under existing regulations, the CFTC has the statutory authority to request further information from companies that “self-certify” their financial products.
The CFTC is also looking into prediction market platform Kalshi's Super Bowl-related event contracts and how they align with derivatives regulations. Its prediction market, "Kansas City vs Philadelphia Football," launched on January 24 and has already recorded more than $2.5 million in trading volume.
Kalshi also introduced markets that allow users to bet on which companies will run adverts during the game. These markets have seen almost $1.5 million in wagers. Yesterday, Robinhood Derivatives announced a partnership with Kalshi to allow certain traders to bet on the Super Bowl through its platform.
The CFTC will ensure that these offerings are not vulnerable to manipulation. It will then determine if enforcement action is needed.
