Crypto Sports Betting in the U.S.: The Rise of Prediction Markets and the Future of Wagering
In 2025, the intersection of cryptocurrency and sports betting is no longer a speculative concept—it’s a rapidly evolving reality. A growing number of U.S. companies are offering crypto-based sports betting contracts, blending the thrill of wagering with the mechanics of financial trading. This shift is not just about technological innovation; it reflects deeper trends in consumer behavior, regulatory reform, and the gamification of markets.
As traditional sportsbooks face pressure to innovate, and as crypto adoption continues to expand, prediction markets and blockchain-based betting platforms are emerging as powerful alternatives. But this transformation is not without controversy. Legal battles, regulatory uncertainty, and philosophical debates about the nature of gambling versus trading are shaping the future of this space.
The New Players in Crypto Sports Betting
Several U.S.-based companies are pioneering the use of crypto and prediction markets in sports betting. These platforms offer contracts that allow users to “trade” on the outcome of sporting events, much like they would trade stocks or commodities.
Underdog Sports and Crypto.com Derivatives North America (CDNA)
Underdog Sports, a popular fantasy sports platform, has partnered with Crypto.com Derivatives North America to launch a groundbreaking sports prediction market. This collaboration allows users to trade contracts on outcomes of professional and college sports—such as NFL, NBA, and MLB games—directly within the Underdog app.
Unlike traditional sportsbooks that set fixed odds, these prediction markets are driven by supply and demand. Prices fluctuate based on how many users are buying or selling a particular outcome, creating a dynamic and transparent betting environment. Underdog is the first licensed U.S. gaming operator to integrate prediction markets alongside fantasy and traditional sports betting in a single platform.
Kalshi
Kalshi is a federally regulated prediction market platform that has offered contracts on a wide range of events, including sports. The company received approval from the Commodity Futures Trading Commission (CFTC) to operate as a Designated Contract Market (DCM), making it one of the few platforms legally allowed to offer event-based contracts in the U.S.
Kalshi’s sports offerings have faced legal challenges, particularly in California, where regulators have questioned whether prediction markets constitute gambling. Despite these hurdles, Kalshi remains committed to expanding its sports-related contracts and has become a central figure in the debate over the future of event-based trading.
Polymarket
Polymarket is a decentralized prediction market built on blockchain technology. It allows users to trade on outcomes using cryptocurrency, offering markets on everything from politics to sports. While Polymarket operates in a legal gray area in the U.S., it has gained popularity among crypto-savvy users who value decentralization and anonymity.
The platform’s sports markets are particularly active during major events like the Super Bowl, NBA Finals, and World Cup. However, its lack of regulatory approval in the U.S. limits its mainstream adoption.
FanDuel and CME Group
FanDuel, one of the largest sportsbooks in the U.S., has partnered with CME Group to explore financial event contracts. While these contracts are not yet available to retail bettors, the partnership signals a growing interest in bridging traditional sports betting with financial-style prediction markets.
FanDuel’s move into this space reflects a broader trend among major operators to diversify their offerings and appeal to a new generation of bettors who are comfortable with trading apps and crypto platforms.
DraftKings
DraftKings has expressed interest in entering the prediction market space, though it has not yet launched a formal crypto-based offering. CEO Jason Robins has hinted at future integrations that could include blockchain technology and event-based contracts, positioning DraftKings as a potential player in this emerging market.
Why Companies Are Moving Toward Crypto-Based Sports Betting
The shift toward crypto sports betting and prediction markets is driven by several converging factors:
1. Consumer Demand for Transparency and Control
Traditional sportsbooks operate with opaque odds and limited user control. Prediction markets, by contrast, offer transparent pricing based on market dynamics. Users can see how prices move in real time and make decisions based on collective sentiment rather than bookmaker algorithms.
This transparency appeals to younger bettors who are accustomed to trading platforms like Robinhood and Coinbase. They want to understand the mechanics behind their bets and participate in markets that feel fair and responsive.
2. Gamification of Finance
The rise of meme stocks, crypto trading, and fantasy sports has blurred the lines between gambling and investing. Platforms like Underdog and Kalshi capitalize on this trend by offering sports contracts that resemble financial instruments. Users can “invest” in their favorite teams or players, track performance, and even hedge their positions.
This gamification makes sports betting more engaging and intellectually stimulating, attracting users who might otherwise avoid traditional gambling.
3. Regulatory Arbitrage and Innovation
By framing sports betting as event-based trading, companies can potentially sidestep restrictive gambling laws. Platforms like Kalshi operate under CFTC oversight rather than state gaming commissions, allowing them to offer contracts in jurisdictions where sports betting is limited or prohibited.
This regulatory arbitrage encourages innovation and opens new markets, though it also invites scrutiny from lawmakers and regulators.
4. Integration with Crypto Ecosystems
Crypto-native platforms like Polymarket offer seamless integration with digital wallets, decentralized finance (DeFi), and blockchain analytics. This appeals to users who already hold crypto and want to use it for entertainment and speculation.
Moreover, crypto transactions are faster, cheaper, and more secure than traditional payment methods, making them ideal for micro-betting and international markets.
5. Data-Driven Betting
Prediction markets generate rich data on user sentiment, price movement, and market depth. This data can be used to improve odds-making, identify betting trends, and even inform team strategies. Companies see value in turning betting into a data science exercise, where insights can be monetized beyond the wager itself.
Pending Legislation and Regulatory Challenges
The growth of crypto sports betting and prediction markets has caught the attention of lawmakers and regulators. Several pieces of legislation and legal battles could shape the future of this industry.
CFTC Oversight and Kalshi’s Legal Battles
Kalshi’s approval by the CFTC to operate as a DCM was a landmark moment for prediction markets. However, the company’s attempt to offer contracts on political outcomes and sports events has faced resistance. In California, regulators have argued that these contracts resemble gambling and should fall under state jurisdiction.
The outcome of these legal battles could determine whether other platforms can follow Kalshi’s model or whether stricter definitions of gambling will prevail.
Federal Legislation on Event-Based Contracts
There is growing interest in Congress to define and regulate event-based contracts. Some lawmakers support expanding prediction markets as tools for public forecasting and risk management. Others worry that they could be used to circumvent gambling laws or manipulate public sentiment.
Bills under consideration include provisions for licensing, consumer protection, and taxation. The debate centers on whether sports prediction markets are fundamentally different from traditional betting—and whether they should be regulated as financial instruments or games of chance.
State-Level Regulation of Crypto Betting
States like New York, California, and Florida are exploring legislation to regulate crypto-based betting platforms. These laws could require licensing, KYC compliance, and consumer safeguards. They may also address issues like volatility, fraud, and money laundering.
Nevada, home to Las Vegas and a hub for gaming innovation, is considering pilot programs that would allow licensed sportsbooks to accept crypto payments and offer blockchain-based contracts. These programs could serve as models for other states.
SEC and Commodity Classification
The Securities and Exchange Commission (SEC) and the CFTC are also debating how to classify sports prediction contracts. If deemed securities or commodities, they would fall under federal financial regulation. This could impose stricter requirements on platforms and limit retail access.
The classification debate is critical because it affects everything from tax treatment to investor protections. Companies are lobbying for clear guidelines that allow innovation without excessive red tape.
The Road Ahead on the Rise of Crypto Prediction Markets in the US
Crypto sports betting and prediction markets are reshaping how Americans engage with sports, finance, and entertainment. The convergence of these domains offers exciting possibilities—but also complex challenges.
For companies, the opportunity lies in creating platforms that are transparent, engaging, and legally compliant. For users, the appeal is in gaining more control over their wagers, participating in dynamic markets, and integrating betting into broader financial ecosystems.
Regulators face the difficult task of balancing innovation with consumer protection. They must decide whether to embrace prediction markets as legitimate financial tools or restrict them as forms of gambling. The decisions made in the next few years will determine whether crypto sports betting becomes a mainstream activity or remains a niche pursuit.
In the meantime, platforms like Underdog, Kalshi, and Polymarket are pushing the boundaries of what’s possible. They are betting not just on sports—but on the future of betting itself.
Sources:
CNBC – Crypto.com and Underdog partner to offer sports prediction markets
LegalSportsBetting.com – Underdog, Crypto.com Team Up In Sports Prediction Market
Next.io – Underdog and Crypto.com team up for sports prediction markets
Bloomberg – Kalshi’s legal battle over political prediction markets
CoinDesk – Polymarket’s growth and regulatory challenges
CFTC – Designated Contract Market approvals and oversight
SEC – Statements on event-based contracts and crypto classification
Nevada Gaming Control Board – Pilot programs for crypto wagering