The recent investigation of Crypto.com and Kalshi sports contracts are reduced to a single question: they are event contracts based on sports “games” in the sense of the public exchange law, said Crypto’s lawyer Aaron Brogan .
The Basic Products Trade Commission (CFTC) is investigating the Super Bowl event contracts at Crypto.com and Kalshi, according to a Bloomberg report.
“If sports do not constitute the games, then, given the current legal position of the CFTC, the CFTC probably does not have the power to prohibit Crypto.com and Kalshi for self -autrtifying these contracts,” Brogan told Coindesk.
However, all this is a bit more complicated than it seems on the surface.
“This is a surprisingly Espinosa question, which was approached in the Kalshi ruling,” Britan said, referring to the decision of the past autumn that allowed Kalshi to advance with his electoral betting contracts when confirming that they do not fall under the restricted categories of CFTC .
Britan explained that the judge in that ruling defined the “game” as “games” or “playing games for bets” and specifically cited past discussions in Congress during the law of exchange for writing basic products, during which a Legislator said the rule against games was destined to cover sports bets.
“All of that sounds bad for these contracts, but I am not totally convinced,” Brogan continued. “The finding of Judge Cobb here is dictates, without union, and legislative history is only relevant when the law is ambiguous.”
Brogan also points out the definition of the Merriam-Webster Games Dictionary as not “playing games” but “the practice or activity of playing gaming for bets.”
“At least in Merriam-Webster, this clearly means betting, not sports, so I think that these prediction markets would have colorable arguments if they had to go to the mats. Some judges could be receptive to this type of textual argument,” he said BROGAN.
And finally, there is the problem of the changing nature of the CFTC itself. Many believe that the appointment of Republican Caroline Pham as president of the Commission will lead to a regulatory approach plus Laissez-Fafaire, Brogan said.
“[The Democrats] He had been very skeptical of event contracts oriented to retail trade and fought hard against First Predictitit and then Kalshi in 2023 and 2024 to try to prevent them from offering electoral contracts, “Brogan continued.
But, how Laissez-Faire is still something for the debate.
“If you are investigating these Kalshi contracts after uninterruption, maybe they will still be aggressive in at least some event contracts,” Britan concluded.
