Crypto.com has significantly reduced the availability of its sports event contracts and broader prediction market offerings across the United States, pulling out of Arizona and at least eight other states as regulatory resistance continues to build. The company’s actions follow cease-and-desist notices, lawsuits, and warnings from state gaming authorities that argue such products amount to unlicensed sports betting.

In Arizona, Crypto.com ended sports event contracts on Tuesday, Dec. 2, and removed all remaining prediction market services on Friday, Dec. 12, according to the company. A spokesperson cited by Sports Betting Dime confirmed that Crypto.com no longer offers sports event contracts in Michigan, Maryland, Massachusetts, Illinois, New Jersey, Nevada, and Ohio, and that it does not operate in New York in any capacity. Together, these developments place Arizona among nine states where Crypto.com has paused or exited its prediction market activity.

State regulators in each of these jurisdictions have challenged prediction markets tied to sports outcomes, often equating them with illegal gambling products when offered without a sports wagering license. Several of the affected states are currently involved in legal disputes with prediction market companies following enforcement actions.

State Pushback and Ongoing Legal Disputes

Maryland, Massachusetts, New Jersey, New York, Nevada, and Ohio are all engaged in lawsuits linked to cease-and-desist notices issued against companies offering sports event contracts. Arizona and Illinois have also sent cease-and-desist notices to prediction market platforms, while Michigan has taken a different approach by cautioning licensed gaming operators against partnering with or facilitating such markets. The Michigan Gaming Control Board announced an investigation into prediction markets earlier this year.

Nevada represents one of the more direct enforcement outcomes. In October, a court denied Crypto.com a preliminary injunction against the Nevada Gaming Control Board, after which the company confirmed it had stopped offering sports contracts in the state.

At the center of these disputes lies a disagreement over regulatory authority. Crypto.com, along with companies such as Robinhood and Kalshi, maintains that prediction markets fall under federal oversight, not state gaming regulation. State authorities, however, argue that sports-related contracts closely resemble traditional sports betting and therefore require state licenses and compliance with local gambling laws.

Arizona License Action Brings New Scrutiny

Arizona’s enforcement efforts drew national attention earlier this month when the Arizona Department of Gaming informed Underdog that it intended to revoke the company’s fantasy sports contest operator license. The decision stemmed from Underdog’s partnership with Crypto.com, even though Underdog Markets, its prediction market product, was never active in Arizona.

Underdog launched Underdog Markets in early September after announcing its collaboration with Crypto.com, allowing customers in eligible states to trade sports event contracts across major leagues. In a Sept. 15 notice, Arizona regulators warned Underdog that “any relationship between the licensee (to include its owners, related entities, principals, agents, or employees) and a person or entity offering, enabling, or selling event contracts in Arizona” would factor into licensing decisions.

On Dec. 5, Clifford Holden, Assistant Director of Certification and Licensing at the Arizona Department of Gaming, wrote to Underdog, stating, “ADG has investigated this matter. It has determined that Crypto continues to operate illegally in Arizona.”

Another notice from the department explained the rationale behind the proposed license revocation in stronger terms: “ADG has determined that Underdog, by contracting with Crypto, benefitting from Crypto’s services, supporting Crypto’s interests, and providing financial support to Crypto is aiding and abetting Crypto’s illegal conduct in Arizona and providing it with a façade of legitimacy. Moreover, and in the same fashion, Underdog’s relationship with Crypto is an association that poses a threat to the public interest of this State. As a result, the Department hereby provides Underdog notice of its intent to revoke fantasy sports contest operator license FS200008.”

An Arizona Department of Gaming spokesperson later emphasized the agency’s broader stance, saying, “The department takes its responsibility to regulate gaming in Arizona seriously and regularly evaluates licensee conduct to ensure compliance as part of its regulatory duties. As outlined in previous communications with licensees, we expect all licensees to follow the law. Beyond that, the department does not comment on potential enforcement matters.”

Partnerships, Contrasts, and Broader Market Impact

Underdog is not the only company linked to Crypto.com through prediction market partnerships. Fanatics Betting and Gaming also works with Crypto.com and launched Fanatics Markets on Dec. 3, one day after Crypto.com withdrew sports contracts from Arizona. Fanatics Markets has never been available in the state, and it remains unclear whether Arizona regulators will examine Fanatics’ sports betting license as they did with Underdog.

PrizePicks, another licensed fantasy sports operator in Arizona, introduced prediction market offerings on Nov. 15 through its subsidiary, Performance Predictions II, and announced a partnership with Kalshi. While PrizePicks’ prediction market contracts are available in 41 states and Washington, D.C., none of those offerings are accessible in Arizona.

Crypto.com’s decision to geofence and withdraw from certain states stands in contrast to Kalshi’s position. Kalshi has argued in multiple legal filings that it has the right to offer sports event contracts nationwide and that restricting access by location could violate federal rules tied to Commodity Futures Trading Commission registration. Despite similar regulatory pressure, Kalshi continues to contest state authority rather than scale back operations.

For now, Crypto.com’s retreat highlights the growing divide between state gaming regulators and prediction market platforms, a conflict that remains unresolved as lawsuits and enforcement actions continue to unfold.