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Crypto.com and Polymarket Under Fire as CFTC Tightens Betting Regulations

Published
Eddie Mitchell
Published
By Eddie Mitchell
Edited by Ryan James
Key Takeaways
  • Sports betting is legal in 38 states, and Crypto.com operates in all 50.
  • Polymarket is under pressure from the Biden administration to provide customer details.
  • The CFTC’s Chairman, Rostin Behnam, will officially step down on Jan. 20. Donald Trump has yet to name a successor.

The U.S. Commodity Futures Trading Commission (CFTC) may be opening up an investigation into cryptocurrency exchange Crypto.com for allegedly violating U.S. laws by allowing users to bet on the outcomes of major football games such as the Super Bowl.

Illegal Formation

As Bloomberg reports, the CFTC is examining whether Crypto.com’s Super Bowl and American football event contracts violated gaming laws .

Gambling laws are complicated in the U.S. Sports betting has been banned or prohibited in most states under federal law for many years. Since 2018, however, the states have been allowed to regulate the activity themselves.

Some have opted to legitimize sports betting wholesale, while others may still restrict sports gambling to specific locations or other limitations. Regardless, 38 states, including the District of Columbia, have legalized sports betting  to some degree; 30 of those states allow online and mobile sports betting.

In August, the agency proposed banning certain event contracts, namely those in sports and politics.

Crypto.com’s contracts, which allow the platform’s investors to wager on outcomes of college and National Football League matches, are purposefully ambiguous in not mentioning the games by their formal names on promotional or social media materials, though they can be seen on the platform’s app.

The problem is that Crypto.com is available in all 50 states and isn’t managed state-by-state. Crypto.com’s introduction of a “self-certified” contract may violate gaming law. Ironically, this comes after a legal ruling  effectively greenlit events contracts.

Roughing the Passer

The news follows the CFTC’s ongoing efforts to reign in crypto betting platforms such as Polymarket. The CFTC launched criminal and civil investigations into the platform during and following the 2024 U.S. Presidential race.

Notably, the CFTC alleges Polymarket violated a 2022 settlement in which it agreed to cease all services for U.S. customers and pay a $1.4 million fine for operating without registering with the CFTC.

Perhaps most contentious is how the CFTC has proposed to define “gaming” under its rules.

However, the CFTC’s use of the word “gaming” as a broad and ambiguous definition received significant pushback from notable industry players. This rule was never finalized.

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Eddie Mitchell

Eddie has been writing news and content primarily for crypto news and industry players over the past seven years. With an eye for the bigger picture, Eddie prefers to investigate the broader implications of a story, as well as explore the weird and wonderful world of crypto. He believes blockchain has already changed the world, but observes the space overall with a skeptical and adoring eye.
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