The U.S. Commodity Futures Trading Commission (CFTC) is scrutinizing Super Bowl-related betting markets offered by Crypto.com and prediction platform Kalshi. The investigation focuses on whether these event contracts comply with existing derivatives regulations, according to a report from Bloomberg on February 4.
Crypto.com’s Response to CFTC Inquiry
Crypto.com, which operates a derivatives exchange in the U.S., informed the CFTC on December 19 that it would begin trading Super Bowl event contracts starting December 23. However, due to the holiday season and the potential for a government shutdown, the CFTC did not have sufficient time to review the contracts before they went live.
Despite the ongoing inquiry, Crypto.com has stated its commitment to continuing these offerings. The company emphasized its confidence in the legality of its event contracts, noting, “We firmly believe in the legality of our events contracts and believe the CFTC is the appropriate regulator to bring federally regulated market integrity, manipulation controls, and product availability in all 50 states.”
Kalshi Under Similar Review
Alongside Crypto.com, the CFTC is also examining event contracts from Kalshi, a prediction market platform. Kalshi’s Super Bowl market, titled “Kansas City vs Philadelphia Football,” launched on January 24 and has already generated over $2.4 million in trading volume.
Regulatory Timeline and Potential Outcomes
CFTC regulations require a 90-day review period for new event contracts, meaning the commission cannot halt the trading of Super Bowl-related contracts before the game, which takes place on February 9. However, the CFTC could choose to ban these types of contracts after the event concludes.
This investigation comes on the heels of a January 27 announcement from the CFTC’s new leadership, signaling increased scrutiny on emerging issues within the derivatives market. The commission, led by Caroline Pham, is authorized to request additional information from companies that “self-certify” their financial products, ensuring they are not vulnerable to manipulation and comply with existing regulations.
While Crypto.com and Kalshi continue to offer Super Bowl betting markets, the CFTC’s decision could set a precedent for how event-based derivatives are regulated moving forward. Both companies are actively cooperating with the regulator to address compliance concerns.
