What are Crypto Sports Betting Market Contracts?
Sports betting market contracts are financial derivatives that allow users to trade on the outcome of a sporting event, rather than placing a traditional bet against a bookmaker. These products are legally defined differently from gambling, allowing platforms to offer them in a wider range of jurisdictions. The market is rapidly expanding, with major players like Crypto.com and Underdog launching federally-regulated offerings in the U.S. in 2025.
How sports market contracts work
Instead of traditional odds, users buy “Yes” or “No” contracts on a particular outcome. The price of the contract is determined by market activity—supply and demand from other users—rather than a bookmaker setting the odds.
Example: Super Bowl contracts
- A market for “Will the Kansas City Chiefs win Super Bowl 2026?” is offered.
- If you believe the Chiefs will win, you can buy “Yes” contracts. If you think they will lose, you can buy “No” contracts.
- The price of a contract, say for the Chiefs winning, fluctuates based on how many people are buying “Yes” contracts versus “No” contracts.
- All contracts expire at a fixed value if they predict the correct outcome (e.g., $100 per contract) and at $0 if incorrect.
- Two ways to profit:
- Trade pre-event: Buy contracts when the market price is low and sell them for a profit if the price rises before the event begins.
- Hold to expiration: Hold onto your winning contracts until the event concludes, when they expire at their full value. Your profit is the difference between your purchase price and the $100 payout.
Key players in the sports event contract market
- Crypto.com | Derivatives North America (CDNA): A Commodity Futures Trading Commission (CFTC)-regulated exchange that was a pioneer in offering sports event contracts. It launched its first sports prediction market in December 2024.
- Underdog: A major fantasy sports and sports betting company that partnered with Crypto.com in September 2025 to offer sports event contracts. The contracts, powered by Crypto.com’s infrastructure, are available through the Underdog app.
- Other Platforms: Financial platforms like Robinhood, Kalshi, and decentralized prediction markets such as Polymarket also offer event contracts, though they have faced regulatory scrutiny.
Regulatory landscape and legal challenges
The legality of sports event contracts is a complex and evolving issue.
- CFTC regulation: Sports event contracts are federally regulated by the CFTC as derivatives, not as traditional sports betting. This regulatory distinction is what allows platforms to offer these contracts across the U.S., including in states where sports betting is not yet legal.
- Conflict with state law: State gaming regulators have challenged this framework, arguing that sports event contracts are a form of gambling that falls under their jurisdiction. These conflicts have resulted in lawsuits and ongoing regulatory battles.
- Ongoing scrutiny: The CFTC has historically questioned whether sports-based event contracts are “contrary to the public interest” and has investigated the offerings. The outcome of this debate will determine whether these markets become widely accepted financial instruments or are reclassified under traditional gambling laws.