CFTC Scrutinizes Contracts for Super Bowl Event as the Market Grows

Booming predictions markets, however, have regulators taking a good close look. According to a Bloomberg report, the Commodity Futures Trading Commission is scrutinizing both Crypto.com and Kalshi Inc. over their recently launched Super Bowl event contracts.

Booming prediction markets have drawn the attention of regulators in the United States. According to a Bloomberg report, the Commodity Futures Trading Commission (CFTC) is scrutinizing both Crypto.com and Kalshi Inc. over their recently launched Super Bowl event contracts. This could signal potential regulatory headwinds for this rapidly growing sector.

Crypto.com, which operates a U.S.-based derivatives exchange, notified the CFTC on December 19 of its plans to launch Super Bowl-related contracts by December 23. This gave regulators a short window to review the products before the holiday season. Weeks later, the CFTC has ramped up its oversight by requesting more details from firms that self-certify their financial offerings.

CFTC Eyes Bans, New Rules for Event-Based Trading Markets

Under U.S. derivatives laws, self-certified contracts are required to meet stringent standards set by regulators to prevent manipulation and ensure compliance. While the CFTC cannot immediately intervene and halt trading on the contracts, the agency has the authority to enforce bans or introduce any new set of regulations. A CFTC spokesperson noted that the contracts are being reviewed under existing regulations, leaving open the possibility of future actions.

Crypto.com has been particularly aggressive in asserting that its event contracts are exempt from CFTC oversight because they are not derivatives. The company withdrew two sports-related filings before self-certifying a new contract that focused on spectator sports.

Kalshi, on the other hand, opened its “Kansas City vs. Philadelphia” Super Bowl market on January 24, and it has already seen nearly $2.5 million in trading volume. The company also introduced contracts on brands expected to advertise during the game, generating over $1.5 million in activity.

The broader prediction market industry has seen exponential growth, with the decentralized prediction platform handling over $2.5 billion in bets during the 2024 U.S. presidential election cycle, highlighting the massive appetite for event-based betting.

However, with the CFTC increasing its scrutiny, the fate of event-based trading in the U.S. hangs in the balance, and any regulatory crackdown could reshape how companies like Crypto.com and Kalshi navigate this rapidly expanding market.