BREAKING: Coinbase has announced a transformative shift in US prediction markets that could redefine how consumers engage with event-based contracts. In its newly released 2026 Crypto Market Outlook, Coinbase highlights that these markets are evolving from niche betting tools into legitimate financial instruments.
This urgent update comes just after Coinbase launched its own prediction market product in partnership with Kalshi. The timing is crucial as event contracts gain momentum among both cryptocurrency firms and traditional betting companies. Currently, around 12 platforms are operational in the US, but Coinbase predicts this number will significantly increase by 2026.
Coinbase projects that stronger liquidity and a growing user base will drive the next phase of prediction markets. As more trades are executed, the company anticipates improvements in market design, clearer regulations, and enhanced governance. These developments are essential for prediction markets to integrate more seamlessly into the broader financial landscape.
While increased competition among platforms may provide users with additional options, Coinbase warns that this may dilute liquidity across many players. The firm suggests that new services could emerge, utilizing smart contracts and APIs to connect various prediction market protocols. This innovation could enable users to access consolidated odds and improved liquidity from a single source, potentially attracting significant investors crucial for sustained growth.
Additionally, Coinbase identifies a recent alteration in US betting tax rules as a factor that could further benefit prediction markets. A new law permits gamblers to deduct 90% of their losses against their winnings, rather than the full amount. Given the ambiguity surrounding the taxation of event contracts, Coinbase believes these markets may become more appealing than traditional sportsbooks and casinos. Event contracts resemble financial products more closely than bets, which might help users navigate the complexities of the new tax landscape.
Despite this optimistic outlook, regulatory uncertainty looms. Ongoing legal disputes between platforms and state officials raise questions about whether prediction markets should be regulated federally or at the state level. Coinbase maintains that these products ought to be governed by federal commodities regulations. Nevertheless, the firm views the current regulatory climate as an opportunity for growth rather than a hindrance.
As the landscape of prediction markets transforms, Coinbase foresees a future where they play a pivotal role in US financial trading, driven by their expanding size, improved infrastructure, and evolving tax implications. This development is one to watch closely, as it holds significant potential for reshaping the investment landscape.
Stay tuned for more updates as this situation develops, and consider how these changes might impact your trading strategies in the near future.