Crypto Platforms, Prediction Markets Pose New Threat to Sports Betting Leaders

Crypto Platforms, Prediction Markets Pose New Threat to Sports Betting Leaders

Crypto.com, a cryptocurrency trading platform, recently launched a sports event trading market. Users can now purchase contracts for specific teams to win or lose Super Bowl LIX.

The company’s latest offering is not going to negatively influence the legalized sports betting handle tied to next month’s game. It might not even impact the amount of money wagered on Super Bowl LX in 2026.

But it is the first step in a potentially massive expansion of online sports betting’s competitive landscape.

“Prior to this, DraftKings and FanDuel were looking over their shoulder at European operators wondering ‘is Bet365 going to invest more in the U. S. market’? Looking over their shoulders at the traditional casino operators wondering ‘is BetMGM going to make a push' or ‘will Hard Rock be able to leverage their Florida monopoly to become a national competitor’. And maybe looking over their shoulder at some of the sports stakeholders, like Fanatics, with large user databases that may be relevant and may cross-sell,” Chris Grove (co-founder, Acies Investments) said. “Now, they're having to look to an entirely new roster of competitors who are far closer in many ways to the core market that they serve.”

And remember, some of these cryptocurrency trading platforms and prediction markets have user bases several times larger than OSB’s market leaders. For context, Robinhood reported 24.2 million funded accounts and 11.8 active monthly users in July 2024. FanDuel posted ‘just’ 3.46 million active users during that same time frame.

“I’d be concerned if I were DraftKings and FanDuel,” Grove said.

The concern stems from the reality that there is minimal daylight between CFTC mediated prediction markets and the event futures traditional sportsbooks post.

“If you abstract both of them, they both end up being ‘I think X is going to happen in the future’ and ‘I'm willing to wager Y money on it happening’,” Grove said. 

The key difference between the two, other than how the lines are set, is that the former are federally regulated, and their products are available to consumers in all 50 states. By contrast, sports betting operators are governed on a state-by-state basis.

But while prediction markets and online sportsbooks appear similar at an abstract level, practically speaking their offerings remain very different. At least, for now.

Crypto.com users are only able to predict the winner or loser of a single football game. Those same people can find millions of events and hundreds of different ways to play them at a traditional book (think: same-game parlays, player props etc.). 

“I won't even say this is a toe in the water. This is like the edge of the big toenail on the beach,” Grove said.

However, it is expected that the company will work to provide an increasingly comparable product line over time.

“Barring some very clear signal from the CFTC that sports are off-limits, you will see both the crypto-centric platforms, like Crypto.com and Polymarket, as well as some of the more digitally native equity-based products, like Robinhood, push aggressively into this space,” Grove said.

To be clear, CFTC event futures weren’t designed to compete with sportsbook offerings.

“But what you have now is an interesting shift in the political winds,” Grove said. There is this “sense that the incoming administration may take a far more favorable, perhaps a completely enabling view, on what should be allowed under the remit of these derivative markets.”

Many in president-elect Donald Trump’s close orbit see value in prediction markets, above and beyond any commercial potential that exists.

“There's a deeper belief that they serve a public good, and as a source of truth,” Grove said.

In theory, they move in perfect concert with the market by tapping into the wisdom of the crowd.

The differs from the fixed based odds offered by a sportsbook. While they may reflect a consensus, they are initially set by an ‘expert’ and then move based upon the book’s commercial agenda and exposure.

Just how accommodating the incoming administration will be remains to be seen.

“Is their support going to be meaningful or maniacal? That’s the spectrum we’re dealing with,” Grove said. 

Sport betting’s new entrants aren’t going to reach product parity overnight. It will take time and resources. And there may be some legal resistance at a state level. 

So, their pursuit of market share isn’t going to diminish FanDuel or DraftKings’ earnings in the next quarter or two. It might not even have an impact on sport betting’s U.S. market leaders at all in 2025.

But Crypto.com’s introduction of a sports prediction market represents sea change–a new means of entering and competing in the legal online sports betting space that didn't exist just a few weeks ago.

And it opens the door to several other deep pocketed companies, with large relevant databases, who are already offering similar products, to follow suit.

“The defining question of the next year is how close will Crypto.com and other crypto platforms or prediction markets be able to get their CFTC mediated sports prediction contract offerings to what consumers have come to recognize as the standard menu for a sportsbook,” Grove said.

Their ability to do that will determine their relative success. 

While equity platforms, like Robinbood, have a larger number of active users, “the overlap between the Crypto.com customer and the OSB customer is possibly more significant,” Grove said. “You end up in a pretty similar neighborhood populated largely by ~37-year-old men.”

No one knows for sure that crypto traders will cross over into sports. But these are people who are already risking real money predicting outcomes. It’s logical to suspect many will.

That makes crypto platforms, and prediction markets a far bigger threat to the OSB establishment than the unregulated sweepstakes companies capturing headlines. Remember, more than 70% of sweepstakes players never spend a dollar; and many of the ones who do are small ticket casual gamers.

“There are always sports betting customers on the margin. But in the aggregate, when we look under the hood at Fliff or High 5 casino, the companies that they are competing with for customers and customer dollars are like Zynga, Playtika or Candy Crush. It’s the casual social mobile companies that have an emphasis on casino or sports themed games. It isn't the DraftKings and FanDuels of the world,” Grove said. “It’s just a very different customer playing for very different reasons.”

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