The recent crypto.com probe and Kalshi sports contracts comes down to a single question – are contracts of events based on sports “game” within the meaning of the law on the exchange of goods, said the lawyer Crypto Aaron Brogan.
The Commitay Futures Trading Commission (CFTC) proves the Super Bowl event contracts on Crypto.com and Kalshi, according to a Bloomberg report.
“If sport does not constitute games, then, given the current legal posture of the CFTC, the CFTC probably does not have the power to prohibit Crypto.com and Kalshi of self-cerarant these contracts,” said Brogan at Coindesk.
However, all of this is a little more complicated than it seems on the surface.
“This is a surprisingly thorny question, which was addressed in Kalshi’s decision,” said Brogan, referring to last fall decision that allowed Kalshi to move forward with His electoral Paris contracts confirming that they do not fall under the limited categories of the CFTC of the CFTC.
Brogan explained that the judge in this decision defined the “game” as “playing games” or “playing games for challenges” and specifically cited discussions prior to congress when drafting the law on exchange goods, during which a legislator said that the rule against the game was intended to cover sports betting.
“All this seems bad for these contracts, but I am not completely convinced,” continued Brogan. “The conclusion of the COBB judge here is dicta – non -binding – and legislative history is only relevant when the law is ambiguous.”
Brogan also underlines the definition of the Merriam-Wesbester dictionary of the game as not “playing games”, but “the practice or the activity of playing games for issues”.
“At least in Merriam-Wesbester, it clearly means the game, not sports, so I think these prediction markets would have colorizable arguments if they had to go to carpets. Some judges could be receptive to this type of textualist argument “Said Brogan.
And finally, there is the question of the changing nature of the CFTC itself. Many believe that the appointment of Republican Caroline Pham as chairman of the commission will lead to a regulatory approach more a leaving, said Brogan.
“”[The Democrats] had been very skeptical of the contracts of events focused on retail and fought against the first prediction, then Kalshi in 2023 and 2024 to try to prevent them from offering electoral contracts, “continued Brogan.
But how to leave it is always something for the debate.
“If they have surveyed on these Kalshi Post-Abunction contracts, they may still be Bellicians on at least certain event contracts,” concluded Brogan.
