Super Bowl Bets Under the Microscope: CFTC Probes Crypto Event Contracts
The U.S. Commodity Futures Trading Commission (CFTC) is taking a closer look at Super Bowl-related betting contracts offered by Crypto.com and Kalshi Inc., two prominent players in the digital asset space. The regulator is examining whether these "event contracts," which allow traders to wager on the outcome of real-world events, comply with existing derivatives regulations.
What are Event Contracts and Why is the CFTC Concerned?
The CFTC has the authority to request additional information from companies that "self-certify" their financial products. This includes demonstrating that the products are not susceptible to manipulation and meet other regulatory requirements. The agency can then evaluate the responses and decide whether to take enforcement actions or propose new rules.
Crypto.com launched its sports-related event contracts late last year, allowing users to bet on questions such as the winner of the Super Bowl. The CFTC was reportedly caught off guard by this launch, which occurred on December 23. Kalshi's contracts, launched shortly after, were not put under the same level of review.
Robinhood Enters the Arena: Partnering with Kalshi
The CFTC's inquiry comes as Robinhood Markets Inc. announced on Monday that it would be offering its own sports trading through Kalshi's exchange to Robinhood Derivatives clients, further highlighting the growing interest in this emerging asset class.
Gaming or Not? The Key Question for the CFTC
The regulator is particularly interested in whether these contracts qualify as gaming, a category that triggers additional scrutiny under CFTC rules. The agency is expected to vote by mid-April on whether to bar Crypto.com's contracts, although they can continue to trade in the meantime.
A Broader Look at Innovation: CFTC Plans Roundtables
Last week, the CFTC announced it would hold public roundtables on emerging issues in derivatives markets, including event contracts, signaling a broader effort to understand and potentially regulate this rapidly evolving space.