Published on: February 1, 2026, 05:00h.
Updated on: January 31, 2026, 08:09h.
- DraftKings is set to allow users in four states to convert their cryptocurrency into cash for betting deposits.
- This conversion will trigger a taxable event for bettors.
- Cryptocurrency remains disallowed as a direct funding option for wagering accounts in most states.
DraftKings (NASDAQ: DKNG) will soon enable its sportsbook customers in four states to convert cryptocurrencies into cash for account funding.
This information was unveiled during a recent session of the Massachusetts Gaming Commission (MGC), although Massachusetts is not included in the approved states. The states that will support this feature are Illinois, Kentucky, New Hampshire, and Vermont. Gaming officials in Kentucky and Vermont have confirmed to various news outlets that their jurisdictions will permit the conversion of cryptocurrency to cash for DraftKings users. Originally, Massachusetts was thought to be part of this testing group, but plans changed last month.
“We believe crypto is not ready for mainstream adoption,” stated Caitlin Monahan, director of the MGC’s Investigations and Enforcement Bureau (IEB), during a December MGC meeting. “At this point in time, within our existing regulatory framework, we feel it is not a suitable funding source that we want to endorse.”
DraftKings has not yet revealed which cryptocurrencies will be eligible for cash conversion, nor if the selection will include a wide array of options. Bitcoin and Ethereum represent the two leading cryptocurrencies by market cap.
Crypto-to-Cash as an Alternative Funding Method
Last August, DraftKings stopped accepting credit cards for funding iGaming and online sports betting accounts. While some regions permit that form of payment, many, including Illinois, Iowa, Massachusetts, New Hampshire, Tennessee, and Vermont, do not. Virginia has also recently enacted similar legislation.
However, DraftKings users can still fund their daily fantasy sports (DFS), online casinos, and sports betting accounts using debit cards. Additional deposit methods include Apple Pay, bank transfers, and cash deposits at select retail locations.
Boston-based DraftKings has been eyeing cryptocurrency as a payment option for some time, indicating several years ago that it wanted customers to be able to finance accounts directly through digital currencies, despite state regulators expressing reservations. Wyoming is currently the only state where sportsbook operators can directly accept cryptocurrency from customers.
In other states, crypto-enthusiastic bettors have adapted by purchasing sportsbook gift cards using cryptocurrencies and utilizing those cards to bolster their accounts.
Tax Implications of Crypto-to-Cash Conversions
While customers in Illinois, Kentucky, New Hampshire, and Vermont may appreciate the ability to convert cryptocurrency to cash for their betting activities, this convenience does carry tax obligations. Converting Bitcoin or any other digital asset into fiat currency constitutes a taxable event.
“When virtual currency is sold, any capital gain or loss must be reported, subject to applicable restrictions on the deductibility of capital losses,” states the IRS.
Short-term capital gains taxes on cryptocurrencies range from 10% to 37%, while long-term capital gains tax rates peak at 20% for this class of assets.