DraftKings is reportedly making a big play on crypto. The sports betting giant intends to implement a cryptocurrency deposit feature, according to information shared at a Massachusetts Gaming Commission (MGC) hearing last week.
The change would allow DraftKings customers in four states to fund their accounts with digital currencies, converting crypto to US dollars, Next.io reports. The move would also likely help DraftKings Sportsbook appeal to more potential bettors who are crypto natives, as they also continue their push into prediction markets.
Where will DraftKings allow crypto deposits?
The MGC met on Dec. 4 and voted unanimously to strike language from gaming regulations that would have allowed DraftKings, based in Boston, to utilize crypto conversion. However, the MGC voted 4-1 on Jan. 29 to grant a waiver through April that protected DraftKings from potential violations for “failing to firewall Massachusetts digital wallets from other jurisdictions that allow crypto-conversion for funding,” according to InGame.
This will enable DraftKings to conduct crypto conversions in four states.
“[Before] this language was removed from the commission’s regulations, DraftKings had been working towards the launch of a new deposit method that would allow patrons to deposit converted cryptocurrency via a third-party platform,” said Carrie Torris, the MGC Chief of the Sports Wagering Division. “They will, of course, no longer be launching that in Massachusetts, but they do intend to launch in four other states with the first launch occurring in the coming weeks.”
Later in the hearing, MGC Chair Jordan Maynard confirmed that DraftKings hopes to begin this crypto-to-cash campaign in Kentucky, Vermont, New Hampshire and Illinois.
Regulations allowing for the use of cryptocurrency to bet on sports varies by state. A small number of states have already classified crypto and virtual currencies as cash equivalents, which allows them to be converted to dollars before being deposited into wagering accounts. Wyoming was the first, according to Deadspin, followed by Colorado and Virginia.
More recently, Kentucky and Vermont have confirmed that their in-state rules permit the use of digital and virtual currencies, provided they’re converted to cash. No one is betting with any memecoin; cash only.
What does this mean for prediction markets?
DraftKings, hoping to undermine offshore sportsbooks by offering crypto-cash exchanges, seems to follow the business idea that if you make an option easy, legal and cheap, customers will pick that over the illegal alternative.
Deadspin noted that by adopting a crypto-to-cash deposit system on a regulated platform, DraftKings could draw the attention of customers who use cryptocurrency payments at offshore sportsbooks.
“One of the longstanding draws of unregulated operators has been their willingness to accept cryptocurrency payments, offering speed, anonymity, and flexibility that many licensed sportsbooks have not matched,” writes Frank Ammirante.
DraftKings might also be trying to protect its customer base from prediction markets. Though prediction markets are not just sportsbooks in fancier clothes, sports markets are a key part of them. And crypto is intrinsically part of many of these platforms:
After all, many prediction market exchanges are already built on or tied to the blockchain. Polymarket’s global exchange, for example, is blockchain-based and allows customers to deposit by transferring crypto. Kalshi has been aggressively courting crypto holders, announcing that traders can now buy and sell tokenized versions of contracts on Solana.
DraftKings protecting its turf
With prediction markets growing more and more mainstream, DraftKings seems to be taking a multi-pronged approach to insulating its customer base from the growing threat of new prediction market competition. The company already launched its own trading platform, DraftKings Predictions, in 38 states but only offers its sports contracts in 17.
And now DraftKings understandably wants to make its sportsbook product more accessible to crypto natives. After all, who wouldn’t want their sportsbook app to offer speedy, anonymous, flexible, secure and regulated crypto-to-cash payments? Sounds like a good bet.
