The Commodity Futures Trading Commission (CFTC) has launched an investigation into Super Bowl-related event contracts offered by Crypto.com and Kalshi, questioning their compliance with derivatives regulations as the market for sports-based trading products expands rapidly.
Interestingly, on Sunday, another major player in the retail trading arena—Robinhood—launched the exact same contracts in partnership with the event contracts exchange. This raises the question of whether it might soon fall under the regulator’s scrutiny.
CFTC Launches Probe into Super Bowl Event Contracts as Market Expands
The CFTC’s investigation centers on whether these sports-focused event contracts qualify as gaming under existing regulations. The agency is particularly interested in how these products comply with derivatives rules and whether they’re susceptible to market manipulation.
“We are continuing to review the contracts in accordance with our regulations,” a CFTC spokesman stated, noting that the agency plans to hold public roundtables on emerging issues in derivatives markets, including event contracts.
🇺🇸 LATEST: The US CFTC is reportedly investigating Super Bowl markets offered by Crypto. com and Kalshi, asking them how they comply with derivatives rules. pic.twitter.com/bxCRU9LeMD
— Cointelegraph (@Cointelegraph) February 4, 2025
Crypto.com has maintained confidence in its products despite the regulatory scrutiny. “We firmly believe in the legality of our events contracts and believe the CFTC is the appropriate regulator,” a company spokesperson affirmed, confirming they will continue offering these contracts while cooperating with the agency.
The investigation has broader implications for the growing event contracts market. The CFTC’s January vote to place Crypto.com’s sports contracts under special regulatory review highlighted the agency’s concerns about whether such products serve the public interest.
Robinhood Offers Super Bowl Event Contracts Too
Despite the regulatory uncertainty, the market continues to grow. Robinhood’s entry marks a significant expansion, offering its derivatives clients the ability to trade on either the Kansas City Chiefs or Philadelphia Eagles through Kalshi’s exchange.
“Available in all 50 states through KalshiEX LLC, a regulated exchange, the Pro Football Championship event contract gives eligible customers the power to trade on the outcome of the big game,” the company commented in an official announcement yesterday (Monday).
Kalshi 🤝 RobinhoodToday is a big day: Kalshi launches its first broker, Robinhood.25 million more people now have exposure to our prediction markets. pic.twitter.com/GW2HzU4tJr
— Tarek Mansour (@mansourtarek_) February 3, 2025
It’s worth noting that these are not the first contracts of this kind offered by Robinhood. In October of last year, the company introduced similar instruments that allowed users to predict the winner of the US presidential election. The question now is whether this is still trading or if it has crossed over into sports betting or even outright gambling.
The exact same contracts have also appeared in the offerings of some FX and CFD brokers. One of them is FOREX.com, which has indicated plans to offer similar solutions in the future.
Regulations
The timing of these developments is particularly notable, as they come just days after significant political changes, including the recent presidential transition, which could influence the regulatory landscape for these innovative financial products.
The core issue revolves around the classification of sports contracts as gaming under the Commodities Exchange Act. The outcome of this regulatory review could set important precedents for the future of sports-based financial products and their accessibility to retail investors.
Kalshi is a CFTC-regulated financial exchange that lets people trade on event outcomes through binary contracts. Founded in 2018 by Tarek Mansour and Luana Lopes Lara, the platform received official CFTC approval in late 2020. These contracts pay out either $1 if an event occurs or $0 if it doesn’t, and they can cover economic indicators, weather patterns, political outcomes and sports events.
This article was written by Damian Chmiel at www.financemagnates.com.RegulationRead More
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