What are prediction markets and how do they work with crypto?

Prediction markets are platforms where users buy and sell shares based on the likelihood of future events occurring, with prices reflecting real-time probability estimates. Crypto-based prediction markets like those on Coinbase operate on blockchain technology, allowing users to trade predictions on sports outcomes (including World Cup matches) without traditional intermediaries, with payouts determined by actual results.

Why is Coinbase interested in World Cup prediction markets?

The World Cup generates massive global interest with billions of viewers, creating enormous trading volume potential during the tournament's month-long duration. Analysts at Bernstein noted that major sporting events drive significant user engagement and transaction activity on crypto platforms, making the World Cup an opportunity for Coinbase to attract new users and increase trading fees during peak interest periods.

Is it legal to use prediction markets for sports betting?

Prediction markets operate in a legal gray area that varies significantly by jurisdiction—some countries treat them as legitimate prediction platforms with regulatory frameworks, while others classify them as unregistered gambling or securities trading. Users should verify the legal status in their specific country or region before participating, as regulations around crypto-based prediction markets remain unclear in many places.

Should I bet on World Cup matches using crypto prediction markets?

Prediction markets involve substantial financial risk, including potential loss of entire investments, cryptocurrency volatility, and platform security vulnerabilities. Before considering participation, individuals should only use money they can afford to lose, understand their local legal requirements, research the specific platform's security record, and recognize that predicting sports outcomes has no guaranteed returns.

Coinbase eyes World Cup boost as prediction markets surge Bernstein Trending Now

Billions of dollars could flow into a new class of betting markets over the next two years, driven by a single sporting event that captures global attention once every four years. Analysts at Bernstein, the investment research firm, have identified the 2026 FIFA World Cup as a potential catalyst that could reshape how cryptocurrency exchanges like Coinbase capture mainstream users—not through traditional trading, but through prediction markets that allow people to wager on game outcomes, player statistics, and tournament results with unprecedented ease and transparency.

What Is a Prediction Market?

A prediction market is a platform where people buy and sell shares tied to the outcome of future events. Unlike traditional sports betting, which relies on a sportsbook setting odds, prediction markets use supply and demand to determine probabilities. If many people believe Argentina will win the World Cup, they buy shares reflecting that outcome, driving the price up. If fewer people believe it, the price falls. The final payout depends on what actually happens—if you bought Argentina-wins shares at $0.60 each and Argentina wins, you receive $1.00 per share, earning a 67% profit. Prediction markets have existed for decades in traditional finance, but blockchain technology—the underlying ledger system behind cryptocurrency—enables them to operate without a centralized authority taking a cut or controlling the rules. A person in Kenya can trade on the same market as someone in Argentina without geographic restrictions. Settlement is automatic through smart contracts, software that executes agreements without intermediaries. Coinbase and other crypto exchanges see prediction markets as a gateway product: simpler than learning to trade Bitcoin or Ethereum, tied to real-world events people already care about, and legally distinct from gambling in many jurisdictions because they're classified as derivatives trading.

Why Is This Moving Right Now?

The "Coinbase eyes World Cup boost as prediction markets surge: Bernstein" thesis hinges on three converging forces. First, prediction market platforms like Polymarket and Kalshi have proven the concept works at scale. During the 2024 U.S. presidential election, Polymarket processed over $4 billion in trading volume, with millions of new users placing their first crypto trades specifically to make political predictions. Second, the regulatory environment has begun clarifying. The U.S. Commodity Futures Trading Commission approved Kalshi to offer certain event contracts in 2023, signaling that prediction markets aren't inherently illegal—they're a legitimate financial product. Third, the 2026 World Cup represents the largest upcoming single event on the global calendar with mass appeal across all age groups, income levels, and geographies. Bernstein's analysis specifically highlighted Coinbase and Robinhood, two retail-focused crypto platforms, as uniquely positioned to capture this wave. Both platforms have spent the past three years building simpler, more accessible interfaces designed for people who aren't cryptocurrency experts. Prediction markets aligned with major sporting events lower barriers to entry: you don't need to understand blockchain technology to bet on whether Kylian Mbappé will score in the final.

How Prediction Markets on Blockchain Actually Work

The mechanics differ from traditional betting in crucial ways. When you trade on a blockchain-based prediction market, your transaction is recorded on a public ledger—a permanent, transparent record that anyone can verify. A smart contract—essentially a program running on the blockchain—manages the entire lifecycle of the market without human oversight. It collects shares purchased, holds collateral, and automatically pays out winners based on oracle data (trusted sources that report real-world outcomes, like official FIFA scoresheets). The process unfolds in stages:

Market creation: A platform like Polymarket (which operates on the Polygon blockchain) creates a contract for "Argentina to win the 2026 World Cup" and specifies the oracle source.
Trading period: Users buy YES or NO shares. Each YES share costs $0 to $1.00, with the price reflecting the market's collective prediction of probability.
Event resolution: After the tournament concludes, the oracle reports the outcome. The smart contract automatically executes payouts—YES holders receive $1.00 per share if correct, NO holders receive nothing.
Settlement: Winning traders withdraw stablecoins (crypto equivalent of dollars) or convert to traditional currency via the hosting platform.

Coinbase's potential role involves becoming the on-ramp and primary liquidity provider. A user interested in the World Cup prediction market would open a Coinbase account, deposit dollars, convert to the appropriate stablecoin, then trade on an integrated or partner prediction market platform. Coinbase captures fees on each step, builds customer lifetime value, and collects behavioral data on what events users care about.

Price History and Key Milestones

Prediction markets as a sector remain young, but their growth trajectory is steep. Polymarket, founded in 2020, processed roughly $200 million in volume through 2023, then surged to over $4 billion during the 2024 election cycle. That 20x growth in a single election demonstrates the potential magnitude Bernstein envisions for the World Cup. Kalshi, launched in 2021, secured regulatory approval from the CFTC in March 2023 to offer contracts on certain events—a milestone that legitimized the entire category. By late 2024, prediction market protocols collectively held over $500 million in open interest (the total value of active trades), up from roughly $50 million in 2022. The 2026 FIFA World Cup represents the first mega-event prediction markets will capture under improved regulatory conditions and with substantially larger mainstream awareness following the 2024 election's proven adoption rates.

What the Data Shows

Bernstein's research provided concrete projections based on several data points:

The 2024 U.S. election brought approximately 2 million new users to prediction markets, with Polymarket alone recording 500,000+ active monthly traders at its peak.
If the 2026 World Cup achieves similar penetration relative to global audience size (estimated 1.5 billion viewers worldwide

Coinbase eyes World Cup boost as prediction markets surge: Bernstein

What Is a Prediction Market?

Why Is This Moving Right Now?

How Prediction Markets on Blockchain Actually Work

Price History and Key Milestones

What the Data Shows

❓ People Also Ask