Americans lost hundreds of billions on crypto speculation. Why is only some of it considered gambling?

Here is the latest from the digital-asset markets: Americans are on pace to lose more money on legal gambling this year than at any point in the country's history. A new analysis by economics writer Joseph Politano projects that the total will exceed a quarter trillion dollars in 2026. Losses have climbed 67% since the start of COVID-19 and another 8% over the past year alone, outpacing any growth recorded between 2000 and 2020.

That figure counts only sportsbooks and casinos, and it excludes the money moving through prediction markets, crypto trading, and stock options, each of which now channels billions of dollars a year into activity that, economically speaking, looks a great deal like a bet. The gap between what regulators call gambling and what they call investing has become one of the stranger features of American financial life. A resident of a state where sports betting is illegal can nonetheless open a crypto prediction market app and take a position on whether the Federal Reserve cuts rates in September, whether a hurricane makes landfall in Florida, or which team wins the World Series.

Market Dynamics

A trader with no view on economic fundamentals can buy an option that expires in six hours and is, both in theory and in practice, a wager on which direction a stock index moves before lunch. A teenager with a crypto wallet can invest in a token that exists purely because a meme went viral. Each of these activities involves risking money on an uncertain outcome, but each falls under a different regulator, a different legal standard, and in some cases, no meaningful oversight at all.

The scale of the gambling problem The American Gaming Association reported that commercial gaming revenue in the US hit a record $78. 72 billion in 2025, up 9. 2% from the year before.

Sports betting alone generated $16. 96 billion in revenue on a total handle of $166. 94 billion, an increase of nearly 23% in revenue and 11% in handle over 2024, when Americans had already wagered just under $150 billion legally on sports.

Market Impact

Since the Supreme Court's 2018 ruling in Murphy v. NCAA struck down the federal prohibition on sports betting, 39 states and Washington, D. have legalized some form of it, and the industry has expanded every year since.

Politano's analysis highlighted the consequences of such an increase in gambling that extended well beyond sportsbooks' balance sheets. Research cited in his piece found that in states where sports betting is legal, an NFL home team's upset loss raises the rate of intimate partner violence by ten percentage points more than in states without legal betting. Separate work from New York Fed economists Jacob Goss and Daniel Mangrum, drawing on millions of credit reports, found that debt delinquency rates rose as states legalized sports gambling, with the effect concentrated among men and people under 40.

You won't see that in AGA's revenue figures, which measure the industry's growth without capturing the toll it takes on the households funding it. At the same time, a set of markets that regulators don't classify as gambling at all has grown even faster in percentage terms. Prediction market activity also surged.

Crypto markets are watching this development closely as investors weigh its potential impact on prices.