CFTC Asks Crypto.com to Halt Sports Contracts Amid Investigation

It appears Crypto.com’s foray into sports betting may be short-lived.

The Commodity Futures Trading Commission (CFTC) has notified the site's parent company, North American Derivatives Exchange, that it will review its new sports prediction offering in 90 days. The review will focus on two contracts placed on December 19. 

In addition to the notification, the CFTC has also requested that Crypto.com halt all sports contract purchases until the review is complete. While this is not an official order, the request signals that the CFTC may have broader concerns about the new offering.

What are Sports Contracts?

Crypto.com has begun to dip into the sports betting pool with sports contracts. These offerings allow customers to purchase contracts for the outcome of certain sports events. If that team wins, a large payout is received based.

“Sports Events Trading offers an entirely new platform for U.S. users to engage nationwide at Crypto.com and in the Crypto.com app,” Crypto.com CEO and co-founder Kris Marszalek shared in a press release. “This unique financial product allows users to trade their prediction on the outcome of a sports event. It’s a fundamentally new concept for sports, and we’re thrilled to be the first regulated platform in the U.S. to offer it to our users.”

The trading platform recently launched a new offering for the Super Bowl, which has been incredibly popular. Since customers are technically betting against each other and the market instead of the house, this doesn’t fall under the category of gambling. However, it also attracts the attention of regulators at the federal and state levels.

More Reviews Likely to Follow

The CFTC review comes at a bad time. Lawmakers nationwide have begun cracking down on industries that use a similar loophole to offer sports wagering. The effort is part of the country's effort to curb problem gambling.

Sweepstakes, offshore, and charity sportsbooks have come into the crosshairs of many investigations and will now be joined by sports prediction markets.

With regulators desperate to slow the spike in gambling addiction and sportsbooks fighting to protect profits, markets like those offered by Crypto.com are likely to face a long and arduous battle to survive.