CFTC Probes Crypto.com, Kalshi for Super Bowl Betting Markets

The Commodity Futures Trading Commission (CFTC), the U.S. government agency responsible for overseeing futures and derivatives markets, has initiated an investigation into the crypto exchange Crypto.com and the prediction market platform Kalshi. The inquiry centers around event contracts related to the Super Bowl, a popular sporting event in the United States. This investigation marks a significant moment in the evolving regulatory landscape for both crypto and prediction markets, raising important questions about the intersection of sports, finance, and digital assets.

This article will dive into the key details of the investigation, the nature of the Super Bowl betting markets offered by Crypto.com and Kalshi, the regulatory environment governing such markets, and the broader implications for the cryptocurrency space and prediction markets. As the CFTC continues its probe, the outcomes could potentially shape how such platforms are regulated in the future, potentially affecting both the U.S. sports betting industry and the rapidly growing crypto markets.

1. Background on the CFTC and Its Role in Financial Regulation

Before exploring the specifics of the CFTC’s probe, it’s important to understand the role of the commission itself. The Commodity Futures Trading Commission is a U.S. federal agency that regulates the trading of derivatives, futures contracts, and swaps. Formed in 1974, the CFTC’s primary goal is to ensure that the markets it oversees remain fair, transparent, and free of manipulation.

The CFTC has regulatory authority over a wide range of financial products, from agricultural commodities to energy futures to more recent innovations like cryptocurrency derivatives. The agency is tasked with protecting market participants from fraud, manipulation, and systemic risks that could disrupt the financial markets. As the digital asset market has grown in size and complexity, the CFTC has increasingly turned its attention to cryptocurrency exchanges and platforms offering innovative financial products, including prediction markets tied to sporting events.

In recent years, the CFTC has provided oversight for cryptocurrency derivatives, like Bitcoin futures, which are traded on exchanges such as the Chicago Mercantile Exchange (CME). However, the commission’s jurisdiction and authority over other crypto-related financial products, such as event contracts tied to specific occurrences, have raised new questions as platforms like Crypto.com and Kalshi continue to innovate in this space.

2. The Super Bowl Betting Markets: An Overview of Crypto.com and Kalshi’s Offerings

The Super Bowl is one of the largest sporting events in the United States, attracting millions of viewers and significant commercial activity. It is also a prime event for sports betting, as fans place wagers on everything from the outcome of the game to individual player performances, team statistics, and even halftime show occurrences.

In December 2024, Crypto.com, a prominent global cryptocurrency exchange, announced the launch of event contracts tied to the Super Bowl. These contracts, offered on Crypto.com’s derivatives exchange, allowed users to speculate on a variety of potential outcomes during the event. While specific details of the event contracts remain somewhat limited, the market’s focus was likely on outcomes like which team would win, the total points scored, and other key in-game events such as the first touchdown or first interception.

Crypto.com’s venture into this market was part of a larger trend of integrating traditional financial markets with the rapidly growing crypto space. By offering event contracts for sports, Crypto.com sought to combine the excitement of sports betting with the speed and transparency of blockchain-based financial products.

In parallel, Kalshi, a regulated prediction market platform, launched a similar set of Super Bowl-related contracts. Kalshi’s platform allows users to trade on various events, ranging from geopolitical developments to financial market outcomes. Kalshi’s Super Bowl contracts gave traders the chance to bet on similar outcomes related to the event, with the added appeal of Kalshi being regulated by the U.S. CFTC as a designated contract market.

Kalshi has been particularly focused on offering financial products that allow users to speculate on non-traditional events, including political elections and economic data releases. The platform’s offerings aim to attract individuals who are interested in the intersection of traditional finance and prediction markets.

Both Crypto.com and Kalshi offered these Super Bowl-related event contracts with the hope of tapping into the massive market for sports betting and prediction markets. In particular, event contracts, which allow traders to bet on discrete events and outcomes, are becoming increasingly popular in the U.S. These markets are distinct from traditional futures contracts in that they deal with specific, one-off occurrences rather than broader market trends.

3. The CFTC’s Investigation: Key Questions and Concerns

In January 2025, it was revealed that the CFTC had initiated an investigation into both Crypto.com and Kalshi regarding the legality and regulatory compliance of their Super Bowl betting markets. The commission has expressed concern that these event contracts may not be in compliance with the Commodity Exchange Act (CEA), which governs the trading of commodities and derivatives in the United States.

The central issue being examined is whether these Super Bowl event contracts should be classified as “futures contracts” or as “prediction markets” under U.S. law. According to the CEA, futures contracts must be traded on exchanges registered with the CFTC and must comply with a variety of regulations designed to prevent manipulation and fraud. However, event contracts like those offered by Crypto.com and Kalshi exist in a legal gray area.

What Are Event Contracts?

Event contracts are financial products that allow individuals to bet on the outcome of specific events. These contracts differ from traditional financial derivatives, as they are often tied to one-off occurrences rather than broader market movements. For example, in the case of the Super Bowl, a trader might purchase a contract predicting that the total points scored by both teams will exceed a certain threshold. Alternatively, users might bet on whether a specific player will score the first touchdown.

While event contracts have been growing in popularity, particularly with the advent of prediction markets, they have not been thoroughly tested within the regulatory framework of the CEA. The CFTC is tasked with determining whether such contracts fall within the scope of traditional futures contracts or whether they can be considered separate, unique financial products. This is particularly relevant for platforms like Kalshi, which is a regulated prediction market.

Regulatory Compliance and Concerns

The CFTC’s investigation into Crypto.com and Kalshi is driven by concerns over market integrity and the potential for manipulation. Event contracts are speculative in nature, and markets that involve such high levels of speculation can be prone to price manipulation, insider trading, and other forms of misconduct. The CFTC is tasked with ensuring that financial markets remain transparent and fair, which is why it is conducting a review of these event contracts.

While neither Crypto.com nor Kalshi has been accused of wrongdoing, the investigation will focus on the specific design of these products, the potential for price manipulation, and whether they comply with existing derivatives regulations. The CFTC is likely to examine whether the platforms are offering these contracts in a manner that aligns with the legal requirements set forth by U.S. law.

One of the critical aspects of this inquiry is whether the platforms’ Super Bowl event contracts are being traded in a way that allows them to be manipulated by large, well-capitalized traders. If the CFTC determines that the markets are susceptible to such manipulation, it could impose stricter rules or even take enforcement actions.

4. The Impact of the CFTC’s Probe on Crypto and Prediction Markets

The CFTC’s probe into Crypto.com and Kalshi is emblematic of the broader regulatory scrutiny facing the cryptocurrency and prediction market industries. These markets are relatively new compared to traditional financial markets, and regulators are still grappling with how best to oversee them.

Crypto Market Regulation: An Evolving Landscape

The cryptocurrency market, in particular, is in the midst of a major regulatory evolution. While Bitcoin and other digital currencies have been in the public eye for more than a decade, the regulatory framework governing these assets is still under development. The CFTC has taken a proactive stance in regulating cryptocurrency derivatives, but its authority over other crypto-related financial products, like event contracts, remains uncertain.

Crypto exchanges like Crypto.com have faced increasing regulatory pressure in recent years. As they expand their product offerings, including derivatives and event contracts, these platforms must navigate a patchwork of global regulations, all while ensuring compliance with U.S. laws. The CFTC’s actions may set a precedent for how other crypto exchanges handle the launch of new products that blur the line between traditional finance and speculative betting.

Prediction Markets and Their Growing Popularity

Prediction markets, particularly those regulated by agencies like the CFTC, are expected to play a larger role in the future of finance. Kalshi’s model, which allows users to trade on a wide range of events, from elections to natural disasters to sports outcomes, has generated significant interest. Kalshi is viewed as a pioneer in this field, and its ability to offer regulated prediction markets provides a legal and transparent framework for trading on events.

However, as Kalshi and other platforms push the boundaries of what is considered acceptable in financial markets, regulatory scrutiny will inevitably follow. The CFTC’s probe into the Super Bowl event contracts is one of the first major tests of how the agency will treat these new forms of trading.

5. Potential Outcomes of the CFTC’s Probe

The CFTC’s investigation could lead to a variety of outcomes, depending on the findings of the review. If the commission determines that the Super Bowl event contracts offered by Crypto.com and Kalshi violate regulations, it could impose penalties, force the platforms to discontinue certain products, or require changes to the structure of the contracts.

On the other hand, if the CFTC concludes that the contracts comply with existing laws, the investigation could pave the way for further development of prediction markets in the U.S. The outcome could set a precedent for future event contracts, not just for sports betting but also for a wide range of other industries.

Long-Term Implications for Crypto and Prediction Markets

The ultimate resolution of this investigation could have far-reaching consequences for both the crypto and prediction market industries. If the CFTC determines that event contracts are allowed under current regulations, it could pave the way for more innovation in this space, leading to the creation of new financial products tied to everything from political events to entertainment milestones.

However, if the CFTC decides to impose stricter regulations or ban certain types of event contracts, it could limit the potential for future growth in these markets. The decision will likely influence how future products are developed and what regulatory hurdles must be cleared before they can be offered to the public.

: The Future of Event Contracts and Crypto

The CFTC’s investigation into Crypto.com and Kalshi over their Super Bowl event contracts is a significant moment in the regulatory landscape for cryptocurrency and prediction markets. As platforms like Crypto.com and Kalshi continue to innovate with new financial products, the regulatory environment will play a key role in shaping the future of these markets.

For now, both Crypto.com and Kalshi are cooperating with the CFTC’s review, and the outcome of the investigation will determine the trajectory of event-based financial products in the U.S. As the cryptocurrency and prediction markets continue to grow, the CFTC’s decision will set an important precedent for future regulatory oversight in this rapidly evolving industry.