CFTC Puts Crypto.com Super Bowl Contracts on Review, Seeks Pause

The Commodity Futures Trading Commission (CFTC) has initiated a review of Crypto.com's futures contracts that allow betting on major football games, including the Super Bowl. The CFTC is considering a 90-day review process to determine the legality of these contracts, which could potentially lead to a ban if they are found to violate gambling laws.



Crypto.com launched its football contracts shortly before Christmas, but the CFTC did not have time to review them due to the holiday season and a potential government shutdown. The contracts are currently available nationwide, unlike traditional sports betting, which is state-specific. The CFTC has historically scrutinized contracts tied to sports and other events, but a recent legal decision has provided some clarity for such contracts, leading to increased interest from other companies in launching similar prediction markets.

The CFTC's cautious approach to similar markets in the past reflects its struggle to address the growing intersection of event-based trading and legal boundaries. In early 2021, ErisX withdrew a proposal for similar contracts before the CFTC could formally vote on their legality. Crypto.com's move comes after a similar but more contentious decision by the exchange Kalshi, which launched and then paused a futures market linked to a criminal case after regulators intervened.

The CFTC's stance on event contracts, particularly sports-related bets, remains uncertain. In 2024, the agency drafted but never finalized a rule defining "gaming" in such markets, which would have banned trading on politics, sports, and other events deemed "against public interest." Rostin Behnam, the outgoing CFTC chairman, recently commented on the issue, saying, "The line between what’s legal and illegal, what’s permitted and impermissible, is getting blurrier. This moves us far from the original purpose of derivatives markets."

Behnam is stepping down on January 20 and leaving the commission entirely on February 7. His departure comes just as President Trump's administration, which is expected to take a more crypto-friendly approach, prepares to appoint new leadership. The president is yet to name Behnam's successor, but everyone's expecting a pro-crypto figure. That's just how Trump rolls now.

The CFTC's review of Crypto.com's Super Bowl contracts has significant implications for the broader cryptocurrency and sports betting markets. If the CFTC approves the contracts, it could open the door for other cryptocurrency platforms to enter the sports betting market, further expanding the reach of these services. This could lead to increased competition in the sports betting industry, potentially challenging traditional sportsbooks that operate on a state-by-state basis. However, if the CFTC finds that Crypto.com's contracts violate gambling laws, it could damage the company's reputation and potentially impact its broader cryptocurrency offerings. This could also raise concerns about the regulatory compliance of other cryptocurrency platforms.

In conclusion, the CFTC's review of Crypto.com's futures contracts has significant implications for the broader cryptocurrency and sports betting markets, including regulatory clarity, market expansion, increased scrutiny, reputation risk, ethical concerns, and market integrity. As the CFTC continues its review, the outcome will determine the future of these contracts and the broader market landscape.