Key takeaways
- Crypto.com’s new “OG” mobile app is marketed as a social “prediction market.”
- OG plans to let users borrow money to increase bet sizes with margin trading.
- Margin can amplify financial losses in emotion-driven sports betting.
- OG launched as the CFTC signaled support for new sports betting rules.
- Some states have ordered prediction markets to cease what they call illegal gambling.
What is the Prediction Market ‘OG’?
According to a launch announcement, OG is an app “powered” by Crypto.com | Derivatives North America (CDNA for short), a company the Commodity Futures Trading Commission has certified to operate a platform for betting on event outcomes, such as sports games.
Prediction markets are controversial gambling sites due to the significant addiction and financial harm risks they pose and not possessing state gaming licenses. Traders can expect a negative rate of return.
Crypto.com says OG plans to be the first sports prediction market app to offer margin trading. It has the potential to boost the app’s profile over rival platforms such as Kalshi, Polymarket, DraftKings Predictions, and FanDuel Predicts.
In other words, OG app users can bet with borrowed money to try for larger wins on markets such as player props. Most likely, the result will be larger sports gambling losses.
Typically, sports account for around 90% of trading volume on prediction markets, with politics/elections accounting for much of the rest.
What Margin Sports Betting Means
Margin trading for sports betting involves wagering with money you borrow from the platform.
You use some of your own money as collateral, and the platform extends the rest as a loan. You’re potentially making bets larger than your own budget allows.
This can dramatically change the risk profile, as you may feel pressure to add funds quickly.
Risks of Using Margin for Sports Betting
Typically, margin calls urge you to deposit more funds to maintain your position when losses pile up.
The sudden demand can trigger stress, urgency, and impulsive decisions, heightening harm for some.
Research on margin borrowing shows investors tend to change behavior as they approach margin calls. With sports betting on margin, that pressure could interact with the emotional volatility of watching games.
Forced liquidations can drive increased chasing behavior, often tied to serious gambling issues.
Leaderboards and VIP Programs
Crypto.com is marketing the OG gambling app with social features and competitive status elements, such as sharing and celebrating betting wins to “climb the leaderboard.”
This is potentially harmful gamification added to sports-related trading.
Leaderboards and VIP tiers tend to feature higher frequency activity and bigger swings.
With sports betting on margin in the equation, attempting to become a so-called top trader can involve taking on greater risk.
Bottom line: Be extremely cautious if you use predatory prediction markets, especially those that lend money. Call 1-800-GAMBLER if you are worried about your betting.
