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On Monday, Crypto.com announced that its platform for people in the United States now offers a sports-event prediction exchange market for the first time. If you thought the conversation of what does and doesn’t represent legal online gambling was muddied before, Crypto.com figuratively just threw some more dirt on the subject and turned on a fire hose.
This market focuses on predictions for which team will win Super Bowl 59 and could be just the first of such markets on the app and website. Proliferation of such markets to other exchanges and involving more events might get the attention of regulators in the US.
Crypto.com announces super expansion of offerings
According to a Dec. 23 press release, Crypto.com CEO and co-founder Kris Marszalek calls the company’s new product “a fundamentally new concept for sports” and touts Crypto.com as “the first regulated platform in the US to offer it to our users.” While Marszalek is right about Crypto.com being a regulated platform, the concept of sports event prediction exchanges are not new to parts of the US.
Predecessors like Sporttrade, which also offer sporting event-based prediction markets, have been operating in multiple US states. A notable difference, however, is that Sporttrade and others like it use US dollars as the means of buying and selling positions in their markets while Crypto.com allows users to utilize cryptocurrencies to do the same.
Also differentiating the products is that Sporttrade and the ilk operate within the framework of regulated sports betting in US states like New Jersey whereas Crypto.com has yet to acquire gaming licenses in any US jurisdictions. That brings up the question of whether or not Crypto.com’s Super Bowl 59 market equates to the kind of gambling that would necessitate such a license.
Growth of such activity could spur regulators’ interests
The Dec. 23 release insinuates that Super Bowl 59 might become just the inaugural sporting event prediction market for Crypto.com, as the release states that users can “trade their own prediction on the outcome of sports events, including the Super Bowl.” Crypto.com has not provided any further information on how common such markets might become on its exchange or how it will select future events for inclusion, if at all.
Crypto.com is a popular exchange for cryptocurrencies but far from the only such market that US residents have access to. While none of Crypto.com’s competitors have made similar announcements to this point, that may not remain the status quo for long.
Such markets becoming commonplace might draw scrutiny, especially in parts of the US where online sports wagering is currently regulated and taxed. As a result, state gaming regulators may examine how the markets fit into current standards and take action if they deem that some markets violate the rules.
The involvement of federal regulators is also possible but could be less likely. Recent court decisions have limited their ability to curtail event prediction markets.
The proliferation of these exchange markets could also prompt some kind of responses from gambling companies operating in regulated US markets.
New market might raise gaming companies’ eyebrows, too
Sports betting is a small-margin product for companies who offer it in regulated markets in the US. While regulated exchanges like Crypto.com have not yet publicly broached the subject of offering online casino games with cryptocurrencies, the offering of sports-based markets might spur gaming companies to want to protect their far more lucrative online casino businesses.
Companies like BetMGM and DraftKings could argue that Crypto.com is offering a similar product but not paying the same privilege fees that they do or incurring the same costs associated with gambling regulations compliance. Similar conversations already exist surrounding online sweepstakes-based sports prediction products.
If that debate expands to include cryptocurrency-based exchange markets, Crypto.com’s offering of those markets could prove to be the catalyst for that inclusion.
