As Bloomberg reports, Crypto.com has rejected the U.S. Commodity Futures Trading Commission’s (CFTC) request for the company to pause trading on its recently introduced sports contracts as the regulator reviews whether the listings meet the legal standards for event contracts.
The contracts under scrutiny allow users to bet on the outcome of sports events, including college bowl games and the national championship, the NFC and AFC championships, and most notably, “The Big Game,” more commonly known as the Super Bowl. However, the bets are not placed “against the house,” but are instead traded between users while Crypto.com, a U.S-based derivatives exchange, takes a small fee.
“We remain committed to working with the CFTC and will continue to support our customers and trade our sports title event contracts in all 50 states without interruption while we review the CFTC’s notification,” a company spokesperson told Bloomberg.
Crypto.com notified the CFTC on Dec. 19 of its intent to launch trading on sports, subsequently self-certifying the new event contracts. The CFTC reportedly lacked sufficient time to review the submission before the holiday season and amid concerns of a government shutdown.
Now the CFTC is initiating a 90-day review to assess the legality of these contracts and determine if they violate gaming laws. This review would conclude after the Super Bowl on Feb. 9, potentially leading to a ban on the contracts after the biggest event in sports is already over.
By then, a new regulatory regime, one that is expected to be much friendlier to prediction markets and the crypto industry, will also have a say.
The CFTC’s current chair, Rostin Behnam, is set to step down on Feb. 7. The incoming administration has not yet announced a successor, though reports suggest that prediction market proponent and former CFTC commissioner Brian Quintenz is a favorite to replace Benham.
What will happen to Crypto.com’s sports event contracts is still anyone’s guess, but prediction market platforms, sportsbooks, bettors, and want-to-be bettors are all watching closely. The outcome could send shockwaves through the sports betting industry.
