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Crypto.com is still very much interested in prediction markets, but it is no longer willing to fight every battle that comes with them.
Over the past couple of weeks, the company has quietly shut down its sports event contracts in a growing number of states, choosing to avoid prolonged clashes with regulators while the legal ground beneath the industry continues to shift.
The move comes as prediction markets draw sharper attention from gaming regulators who argue the products look a lot like traditional sports betting, just packaged differently.
Arizona Triggers a Broader Rethink
Arizona played a major role in Crypto.com’s decision to scale back. After the Arizona Department of Gaming issued a cease-and-desist related to sports prediction markets, Crypto.com pulled its sports contracts from the state on December 12.
The timing was no coincidence. State officials also targeted Underdog, which offers prediction markets through a partnership with Crypto.com, signaling that regulators were prepared to escalate enforcement.
Rather than challenge Arizona directly, Crypto.com Predictions chose to step aside and reassess its exposure. That decision quickly extended beyond one state.
Eight States, One Clear Message
In addition to Arizona, Crypto.com has stopped offering sports event contracts in Michigan, Maryland, Massachusetts, Illinois, New Jersey, Nevada, and Ohio. The company is also not offering any services in New York, where prediction markets are already tied up in court battles involving rival operator Kalshi.
Regulators in many of these states have argued that sports-event contracts constitute illegal gambling without a sports wagering license.
Nevada went a step further earlier this fall by denying Crypto.com a preliminary injunction, a ruling that effectively forced the company to shut down sports contracts in the state.
Other states have taken different approaches. Illinois and Arizona issued cease-and-desist notices in the spring, while Michigan opened an investigation into prediction markets without publicly naming enforcement targets.
Pressure Spreads to Partners
Crypto.com’s retreat has not happened in isolation. Underdog, one of its most visible partners, has already felt the impact.
Arizona officials threatened to revoke Underdog’s fantasy gaming license over its prediction markets offering, marking the most aggressive regulatory action taken so far against a partner tied to Crypto.com.
Fanatics Markets, another Crypto.com partner, could face similar scrutiny. Fanatics offers prediction markets in many states using Crypto.com’s event contracts, and regulators may see little distinction between those offerings and Underdog’s.
At the moment, neither partner offers Crypto.com contracts in the states where the company has pulled back.
A Different Playbook Than Kalshi
Crypto.com’s approach stands in sharp contrast to Kalshi’s. Kalshi has taken regulators to court, arguing that federal oversight by the Commodity Futures Trading Commission gives it the right to operate nationwide without state-based geofencing.
Those arguments have allowed Kalshi to keep its markets live in several states while legal challenges continue. Crypto.com has chosen a more cautious path, complying with state demands and waiting for clearer guidance rather than pushing each dispute into litigation.
Waiting for the Dust to Settle
Prediction markets remain one of the fastest-growing corners of the gambling and financial crossover space, with projections placing the sector in the billions.
Crypto.com’s decision to pause operations in certain states looks less like an exit and more like a calculated timeout.
Once regulators, courts, and lawmakers settle on where prediction markets fit, Crypto.com appears ready to move again. Until then, the company seems content to stay flexible while others keep testing the limits.
