In a rapidly evolving sector where speed governs pricing, risk, and potential gains, Crypto.com has rolled out a regulation that highlights the ongoing friction between professional operators and retail clients within the US event-betting landscape. The platform, recognized as one of the first regulated exchanges in the nation to offer contracts linked to sports results, has instituted a three-second delay on orders placed by retail users participating in live sports prediction markets.
This new policy, detailed in the exchange’s documentation, creates an unequal impact among participants. As reported, the three-second buffer is specifically applied to users not serving as market makers, while professional liquidity providers can execute trades without this delay. This set-up enables market makers to modify or retract their offers ahead of retail orders being executed, particularly in dynamic in-play markets, where a critical event or score update can shift probabilities in mere seconds.
According to Crypto.com, this adjustment aims to enhance liquidity and the stability of the order book. A representative of the company mentioned that the rule “promotes liquidity and fairness,” underscoring that this information is readily available in the platform’s FAQs. Furthermore, the exchange has laid the groundwork for regulatory compliance through a submission to the Commodity Futures Trading Commission (CFTC) dated July 30, which oversees derivatives and certain event contracts.
Crypto.com isn’t the sole entity in the burgeoning prediction-market industry contemplating execution delays. Kalshi Inc., another prominent exchange in this arena, has recently sought CFTC approval to implement its own order delays. This request is currently undergoing the CFTC’s standard ten-day review process, without outlining which customer segments would be impacted. Should the CFTC express no objections, the regulation might be adopted shortly.
The swift growth of prediction markets in recent months, largely fueled by sports-related contracts, has escalated competition to attract significant market-making firms capable of delivering depth and liquidity. For these firms, safeguarding against abrupt probability shifts — including scenarios where individuals close to the action trade on inside information — is paramount. Consequently, execution delays are now seen as a strategic measure to alleviate such risks and entice liquidity providers.
However, providing operational advantages to specific types of participants is neither novel nor without controversy. In prior years, stock exchanges and derivatives markets drew scrutiny for practices perceived as favoring high-frequency trading firms, raising alarms among retail investors about the uneven playing field. This discourse is increasingly manifesting in prediction markets: should these exchanges adopt similar tactics, the notion of a “level playing field” compared to traditional sportsbooks may face increasing scrutiny.
In response to initial reports about its filing, a Kalshi representative downplayed the likelihood of implementing the proposed delay, clarifying via email that the filing “is only a filing” and that the firm may ultimately decide to forgo it. This sentiment echoes broader concerns across the industry: while enhancing the allure for major liquidity providers is strategically beneficial, perceptions of fairness and the potential for regulatory backlash are critical factors to consider.
In this context, Crypto.com’s choice acts as a preliminary test to ascertain how much differentiation in treatment between professional participants and the general public can be applied in US sports event-betting exchanges without compromising user trust or instigating intensified scrutiny from regulatory bodies and lawmakers. The reactions from the market and the CFTC will be key in shaping the upcoming phase of integration between financial trading and sports betting within the United States.