Crypto.com Launches U.S. Sports Prediction Exchange

NEW YORK, NY — On December 23, 2024, Crypto.com, a major cryptocurrency exchange platform, unveiled a new sports-event prediction market in the United States, marking its first venture into this controversial arena. The announcement, which focuses initially on predictions for the outcome of Super Bowl 59, introduces a concept that blends cryptocurrency with sports betting—a combination that may set the stage for a wider, potentially disruptive trend in the U.S. market.

While the platform’s CEO, Kris Marszalek, heralded the offering as a “fundamentally new concept for sports,” the launch has raised significant legal and regulatory questions. Specifically, it has reignited debates over what constitutes legal online gambling in the U.S., a debate that was already complicated by the rapid expansion of sports betting and the introduction of online casinos in certain states.

Crypto.com’s offering is notable for several reasons, including its use of cryptocurrencies, which sets it apart from traditional sports prediction markets like those offered by Sporttrade. While Crypto.com positions itself as a regulated platform, it has yet to acquire the gaming licenses required for operating legal sports betting in U.S. jurisdictions. This raises the question of whether this new product crosses the line into illegal gambling, especially as it could represent a broader trend that might attract attention from regulators.

A New Kind of Betting Market

In his announcement, Marszalek called Crypto.com’s prediction market “the first regulated platform in the U.S. to offer it to our users.” While Crypto.com is regulated as a cryptocurrency exchange, the concept of prediction markets tied to sporting events is far from new in the U.S. Other platforms, such as Sporttrade, have already operated within the framework of state-licensed sports betting in jurisdictions like New Jersey. However, unlike these predecessors, Crypto.com’s market allows users to make bets using cryptocurrencies, rather than U.S. dollars, which is a key distinction.

Sporttrade and other similar services operate under existing sports betting regulations, meaning they are licensed and regulated in states where sports wagering is legal. In contrast, Crypto.com does not yet hold any U.S. gaming licenses. This raises a critical question: Does Crypto.com’s new product, which enables users to predict the outcome of the Super Bowl and other sports events, constitute a form of illegal gambling that would require such licenses?

Crypto.com’s announcement hints that Super Bowl 59 may be just the beginning, with the release stating that users will be able to “trade their own prediction on the outcome of sports events.” The company has not clarified whether it intends to expand these markets to other events or how frequently such prediction markets might appear on the platform. If this model gains traction, it could quickly scale, potentially attracting scrutiny from regulators in states where sports betting is already regulated and taxed.

Regulatory Scrutiny Looms

While Crypto.com has framed the launch as part of its growing suite of offerings, industry observers note that the move could spark significant regulatory interest. In states with legalized sports betting, regulators are increasingly focused on ensuring that operators comply with state-specific rules and tax regimes. If Crypto.com expands its prediction markets to additional events or other sports, state regulators may begin to question whether the platform's activities align with existing gambling laws.

In particular, regulators in states where sports betting is already regulated—such as New Jersey and Nevada—might view Crypto.com’s cryptocurrency-based prediction markets as competition to established operators. These companies, such as DraftKings and BetMGM, have heavily invested in adhering to state regulations, including paying taxes and adhering to consumer protection standards. If Crypto.com’s markets grow without similar oversight, regulators may consider taking action to ensure that all operators play by the same rules.

At the federal level, regulators may face challenges in responding to the growing trend of cryptocurrency-based prediction markets. Recent court decisions have limited the scope of federal authority over certain types of event prediction markets, potentially leaving much of the regulatory burden to individual states. However, should Crypto.com’s product gain significant traction, federal authorities might eventually step in to ensure uniform standards across states.

The introduction of cryptocurrency-based prediction markets could also provoke responses from traditional gambling companies. Operators like BetMGM, DraftKings, and FanDuel, which offer regulated sports betting in various states, could view Crypto.com’s new market as an unfair competitive advantage. These companies pay hefty licensing fees, undergo extensive background checks, and adhere to strict consumer protection laws—costs that Crypto.com, at least for now, is not incurring.

The introduction of sports-based prediction markets via cryptocurrency could reignite debates around the fairness of such platforms. Companies in the regulated sports betting space may argue that Crypto.com is sidestepping the same regulatory hurdles they face, creating an uneven playing field. This could lead to legal challenges or calls for more stringent regulations that specifically address cryptocurrency-driven sports prediction markets.

The concern extends beyond just the impact on sports betting companies. Traditional gambling operators with online casino offerings could also feel the ripple effects. If Crypto.com expands its prediction markets to include other forms of gambling—such as online poker or casino games—it could undermine the more lucrative online casino sector, which already operates in a heavily regulated environment.

Crypto.com is the first regulated platform in the U.S. to offer it to our users.

The Future of Crypto.com

For now, Crypto.com’s sports prediction exchange remains a niche product, with its first major test centered on Super Bowl 59. Whether this market expands or becomes a regular fixture on the platform will depend largely on consumer interest and regulatory developments.

However, the announcement raises important questions about the future of online gambling in the U.S. While the federal government has largely stayed on the sidelines regarding cryptocurrency-based betting markets, the proliferation of such exchanges could lead to a patchwork regulatory approach in individual states. As more companies explore similar markets, the pressure for comprehensive regulation may mount.

The growth of cryptocurrency-based sports prediction exchanges like Crypto.com’s could shape the future of the U.S. gambling landscape, as regulators, established betting companies, and consumers all navigate this new, uncharted territory. The coming months and years will likely determine whether Crypto.com’s entry into the market marks the beginning of a trend or an isolated experiment in the evolving world of sports betting.