Crypto.com’s Sports Betting Futures Under CFTC Scrutiny

Federal regulators are reportedly evaluating whether to investigate the legality of Crypto.com futures contracts, which allow investors to bet on outcomes of major football games, including the Super Bowl. 

This review is taking place as the Commodity Futures Trading Commission (CFTC) votes on a proposal to subject these contracts to a 90-day review. 

The regulator’s review could extend beyond the February 9 Super Bowl LIX. According to Bloomberg reports, once the overall assessment is complete, it could potentially result in a ban on the exchange’s futures product.

At the heart of the issue is whether these contracts, which are available on the Crypto.com Chicago-based derivatives exchange, violate gaming laws. 

Crypto.com announced on December 23 that it was launching sports event trading products. The product allows users to bet on game outcomes.

“This unique financial product allows users to trade their prediction on the outcome of a sports event. It’s a fundamentally new concept for sports, and we’re thrilled to be the first regulated platform in the U.S. to offer it to our users,” said Kris Marszalek, co-founder and CEO of Crypto.com

Crypto.com notified the CFTC on December 19 of its plans to launch the contracts just days before the holiday season. Hence, the agency was left with insufficient time to review them before they went live. 

Despite this, Crypto.com went ahead with the launch on December 23. The exchange wanted to avoid the potential risk of missing out on trading opportunities before the Super Bowl season.

The rise of such event-based contracts is raising concerns. The CFTC, which regulates swaps and futures markets, has been wary of contracts tied to sports and elections. 

“The CFTC has traditionally taken a fairly conservative view on what constitutes an ‘event.’ The cleanest ‘event’ in sports is the outcome of a game. We’d need a fundamental shift in CFTC policy before you could create, sat, SGPs through these kinds of markets. It’s worth noting that the incoming administration appears both crypto-friendly and to believers in the intrinsic value of prediction markets. So a fundamental CFTC shift is not just possible, but arguably probable,” gambling expert Chris Grove wrote on X (formerly Twitter).

Crypto.com’s contracts are tied to the outcomes of college and NFL football games. While they don’t directly mention the games by name, they allow users to wager on events like the Super Bowl. 

The CFTC’s review will focus on whether these contracts can be classified as illegal gaming activities. Notably, the contracts, which are priced at $100 each, allow individual traders to hold up to 2,500 contracts.

The CFTC has had a similar encounter with prediction markets before. It even briefly prohibited Kalshi from listing and clearing its cash-settled political event contracts due to concerns about unlawful gaming.