Regulatory pressures drive exits

Crypto.com withdraws sports event contracts across nine US states | Yogonet International

Regulatory pressures drive exits

Crypto.com withdraws sports event contracts across nine US states

State pullbacks and enforcement actions

Crypto.com has withdrawn sports event contracts from at least nine US states following a series of state-specific enforcement actions, cease-and-desist notices, investigations, and court disputes targeting prediction markets tied to sports outcomes.

A company spokesperson confirmed to various media that Crypto.com is not live with sports markets in Arizona, Michigan, Maryland, Massachusetts, Illinois, New Jersey, Nevada, and Ohio, and that the company does not service New York in any way. In Arizona, Crypto.com pulled sports event contracts on December 2 and removed the rest of its prediction market offerings on December 12.

Each of these jurisdictions has raised objections to sports prediction markets, often equating the products to illegal sports betting without a license. Several states have either issued cease-and-desist notices or are engaged in litigation involving prediction market operators.

Legal and regulatory pressure

Nevada denied Crypto.com a preliminary injunction against the Nevada Gaming Control Board in October, after which the company confirmed it had stopped offering sports contracts in the state. Arizona and Illinois issued cease-and-desist notices in the spring. Michigan has not announced a formal enforcement action but warned licensed operators not to participate in or facilitate sports event contracts and announced an investigation in April.

Maryland, Massachusetts, New Jersey, New York, Nevada, and Ohio are involved in lawsuits with prediction market companies stemming from cease-and-desist actions. Connecticut also issued cease-and-desist notices to Crypto.com, Robinhood and Kalshi, though Crypto.com continues to offer sports event contracts in that state.

Other states where Crypto.com remains active have issued opinions or warnings without naming specific operators. Arkansas’ attorney general released a formal opinion in October calling sports prediction markets illegal without a wagering license, while the Louisiana Gaming Control Board warned licensed sportsbooks that offering sports event contracts could affect their licenses.

Arizona enforcement and partner scrutiny

Arizona’s actions extended to licensed partners. The Arizona Department of Gaming issued a notice of intent on December 5 to revoke Underdog's fantasy sports contest operator license over its prediction market partnership with Crypto.com.

“The Department was made aware that Crypto.com ceased offering sports event contracts and prediction market offerings in Arizona following enforcement and licensing actions taken by the Department within its regulatory authority,” an Arizona Department of Gaming spokesperson told Sports Betting Dime.

The spokesperson said Underdog remains authorized to operate daily fantasy sports contests pending the administrative process. “The notice of intent is subject to the administrative appeal process, no final determination has been made, and the licensee remains authorized to operate pending the outcome of that process,” the spokesperson said.

In the December 5 notice, Arizona officials wrote that “any relationship between the licensee … and a person or entity offering, enabling, or selling event contracts in Arizona” would be considered when determining suitability. Clifford Holden, assistant director for certification and licensing, wrote, “ADG has investigated this matter. It has determined that Crypto continues to operate illegally in Arizona.”

Impact on partners and competing operators

Underdog has offered Underdog Markets in several states since the summer through its collaboration with Crypto.com, though the product was never live in Arizona. As of December 16, Underdog’s predictions product is available in 23 states plus Washington, D.C. Fanatics Betting and Gaming partners with Crypto.com through Fanatics Markets, available in 24 states, but not in the states where Crypto.com has withdrawn.

Crypto.com’s state-by-state pullback contrasts with Kalshi, another member of the Coalition for Prediction Markets. In court filings, Kalshi has said it cannot geofence by state and has cited costs of tens of millions of dollars annually, along with concerns tied to Commodity Futures Trading Commission access rules.