The Commodity Futures Trading Commission (CFTC) has launched an investigation into sports-related prediction markets on platforms like Crypto.com and Kalshi. The focus is to determine whether these contracts are classified as 'gaming' under the Commodities Exchange Act.
The Big Debate: Sports Betting and 'Gaming'
The core issue is whether sports prediction markets fall under 'gaming'. According to crypto lawyer Aaron Brogan, if sports betting is not legally considered gaming, the CFTC might not have the authority to ban Crypto.com and Kalshi from offering such contracts. However, past legal discussions suggest that sports betting was included in the law’s restricted categories.
Leadership Changes and Regulatory Impact
With Republican Caroline Pham leading the CFTC, the regulatory stance could change, possibly favoring retail-oriented event contracts. However, the extent of these changes remains uncertain, as the CFTC still investigates post-inauguration sports contracts by Kalshi and other markets.
What's Next for Crypto Betting?
If the CFTC classifies sports contracts as 'gaming', platforms like Kalshi and Crypto.com might face regulatory challenges or bans. Conversely, if courts adopt a broader interpretation, these platforms may be allowed to continue. The final decision on their legality will be made after the Super Bowl on February 9.
The future of sports-based prediction markets hangs in the balance as regulators and legal experts debate whether these contracts should be allowed under U.S. law.
