Negative reactions to cryptocurrency exchange Coinbase’s use of notifications to push bets on event contracts during the March Madness basketball tournament range from “annoying” to “ridiculous.”
Coinbase rolled out prediction market betting for US-based users in January as part of its partnership with Kalshi. But for some users, the past two months have been an opportunity for exchanges to get people “hooked on sports gambling” with apps that many focused on crypto trading.
“I’ve received 3 notifications from Coinbase about college basketball in the past *hour* alone,” X user AvgJoesCrypto said Thursday. “It is absurd that, in the midst of arguably the worst collapse of trust in the history of the industry, America’s largest CEX has completely pivoted to hooking its customer base to sports gambling and then charging exorbitant fees.”
Similar to betting on sports event contracts on platforms like Kalshi and Polymarket, Coinbase Prediction Markets offers US-based users the opportunity to bet on the outcome of a variety of events.
Prediction market platforms are already facing several lawsuits brought by state-level regulators, even as federal regulator the U.S. Commodity Futures Trading Commission (CFTC) seeks “exclusive jurisdiction” over the market.
PartyDAO co-founder John Palmer expressed similar sentiments in response to Coinbase’s notice and pushed for bets on March Madness games.
“This is essentially encouraging me to gamble. What does this say about our internal philosophy on money management? Can we trust the yield source on USDC interest rates, can we trust internal risk management, etc.?”
In December, before the launch of its prediction market service, Coinbase filed suit against regulators in Connecticut, Illinois, and Michigan. The exchange argued that the CFTC, rather than state-level gambling authorities, should regulate the platform, perhaps in anticipation of the launch of a prediction market.
Cointelegraph reached out to Coinbase for comment on the user complaint, but had not received a response at the time of publication.
Related: Coinbase begins token-back down payment payments for Fannie Mae loans
Congress wants to ban politicians from using prediction markets after insider information allegations
Amid user feedback and state-level lawsuits, many U.S. lawmakers are also pushing for legislation to address prediction market issues. Suspicions that someone in the government is using the polymarket to profit from a bid to remove Venezuelan President Nicolás Maduro from office has led to the introduction of a bill that would ban the U.S. president and members of Congress from using the platform.
Both Calci and Polymarket have separate policies in place to curb insider trading. Mr Kalsi announced that political candidates would be prohibited from trading in campaign-related event contracts, and Polymarket introduced measures to restrict easily manipulated and ethically sensitive markets.
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