UPDATE: Coinbase has just announced a transformative shift coming to US prediction markets that could redefine how event-based contracts are traded. In its latest report, the 2026 Crypto Market Outlook, the crypto exchange reveals that these markets are evolving from niche betting products into legitimate financial instruments.
Coinbase emphasizes that increased liquidity and participation will drive this evolution over the next few years. As trading volumes rise, the company anticipates improvements in market design, clearer regulations, and enhanced governance structures. These advancements are crucial for integrating prediction markets into the broader financial landscape.
This announcement follows closely on the heels of Coinbase’s launch of its own prediction market product in collaboration with Kalshi. The timing is pivotal, as event contracts gain traction among both crypto firms and traditional betting companies. Currently, there are approximately 12 platforms operating in the US, but Coinbase forecasts significant growth by 2026, potentially increasing the number of platforms significantly.
However, Coinbase also warns that this surge in competition could dilute liquidity across multiple platforms. The company suggests that this fragmentation might lead to the development of new services aimed at consolidating various prediction market protocols via smart contracts and APIs. These innovations could provide users with aggregated odds and improved liquidity, attracting institutional investors vital for sustained growth.
In another significant development, a recent change in US betting tax regulations could further favor prediction markets. A new law allows gamblers to deduct 90% of their losses against winnings, rather than the full amount. Coinbase points out that as a result, some bettors may face tax liabilities even with minimal net gains. Since the tax implications for event contracts remain ambiguous, prediction markets could emerge as a more appealing alternative to traditional sportsbooks and casinos. Unlike conventional bets, event contracts are structured more like financial products, potentially shielding users from the adverse effects of the new tax rules.
Despite these promising developments, regulatory uncertainties persist. Ongoing legal disputes between various platforms and state authorities raise questions about whether oversight should come from federal or state entities. Coinbase firmly believes that these products should be governed under federal commodities regulations. The company views the current regulatory environment not as a barrier, but as an opportunity for growth.
In summary, Coinbase is optimistic about the future of prediction markets in the US, forecasting that they will become integral to financial trading due to their expanding scope, improved systems, and favorable tax changes. With these critical shifts on the horizon, stakeholders in the financial sector and betting industries alike are urged to stay alert for rapid developments that may reshape their strategies and operations.
As this news unfolds, Coinbase is positioning itself at the forefront of a financial revolution in the prediction market space, primed to capitalize on emerging trends and regulatory changes. Be sure to follow for the latest updates and insights into this evolving landscape.
