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Crypto.com said it will continue to offer sports prediction markets across all 50 U.S states, despite federal regulators initiating a review on the legality of the offering.
The Commodity Futures Trading Commission (CFTC) announced on Tuesday (January 14) that it would initiate a 90-day review of contract offerings based on the winners of major sports championship events.
After filing certification paperwork with the CFTC on December 19, 2024, Crypto.com began offering prediction markets on the winner of the NFL’s Super Bowl, and more recently, winners of the College Football Playoff, college football bowl games, and other NFL playoff games.
The commission said that it had determined that the sports-based contracts “may involve an activity enumerated” in federal law as being “contrary to the public interest” and therefore subject to prohibition by the CFTC. One of those prohibited activities are contracts based on gaming.
Per regulation, the CFTC asked Crypto.com, which trades as the North American Derivatives Exchange, or Nadex, to suspend any listing and trading of the sports-event contracts during the 90-day review period, which commenced Wednesday.
However, a Crypto.com spokesperson told Vixio GamblingCompliance that the markets would stay online during the course of the review.
"We remain committed to working with the CFTC and will continue to support our customers and the trading of our sports title event contracts in all 50 states without interruption while we review the CFTC’s notification,” the spokesperson said.
The company also expressed frustration with the CFTC's review decision coming at a time of transition in the federal government as the Biden administration ends and President-elect Donald Trump's second term in office begins next week.
"It is disappointing that the current and imminently departing CFTC leadership would take this action while not allowing the incoming CFTC leadership to determine how free markets operate under its administration,” the spokesperson said.
“The majority’s decision to apply this rule contradicts recent Federal Court rulings and conflicts with the current commission’s own statement set forth in its recent rule proposal.”
The outgoing CFTC chair, Rostin Benham, told the Financial Times last week that he has “strong concern” over contracts related to sports, elections and other areas such as violent crime. Benham also called on his eventual successor to bring a renewed focus to establishing clearer lines between what is permitted and not permitted on regulated federal exchanges.
The dispute comes after a similar battle between the CFTC and another exchange, Kalshi, over the legality of prediction markets on elections.
In that dispute, Kalshi came out the winner, as a federal judge overturned the result of a similar 90-day review from 2023 in which the CFTC said the markets were not permitted.
