Coinbase is positioning prediction markets as a core piece of its "Everything Exchange" strategy for 2026. The company not only launched a controversial karaoke ad during the Super Bowl but is also accelerating litigation and acquisitions behind the scenes—suing for "federal priority regulation" in three states while acquiring technology companies to pave the way for its proprietary platform. In essence, they are fighting legal battles for territory while simultaneously spending heavily on marketing, playing hard on both fronts. Despite a net loss of $667 million in Q4, the management believes that prediction markets will stand alongside stocks and commodities as a new magnet attracting traditional investors. Want to know how the cryptocurrency giant navigates the regulatory minefields of cross-border gambling? PASA's official website continues to track the legal and business innovations in prediction markets.
Strategy Dual Track: Kalshi Collaboration + Proprietary Reserves
Coinbase's prediction market strategy adopts a dual-track system of "collaboration + self-research":
Kalshi Collaboration: Launched in December 2025, now open to all users, with plans to add a "Sports Prediction Center" in the future.
Proprietary Reserves: In the same month, acquired the prediction market technology company The Clearing Company (deal expected to complete in January), preparing for independent operations apart from Kalshi.
Non-exclusive Collaboration: CEO Brian Armstrong clarified that Kalshi is a "great partner but not exclusive," with all options on the table.
Competitors like Robinhood and DraftKings are also setting up their platforms through acquisitions or joint ventures, igniting a race for infrastructure.
Litigation Flourishing: Suing Three States, Nevada Pressing Hard
The day after the prediction market went live, Coinbase filed lawsuits in Illinois, Michigan, and Connecticut, demanding the courts declare that prediction markets fall under CFTC federal regulation and are not subject to state gambling laws.
Meanwhile, regulatory pushback is swift:
Nevada: The Gaming Control Board initiated civil enforcement action, accusing it of "operating gambling without a license." Although the state court did not immediately halt operations, a hearing has been scheduled.
Massachusetts: The court has issued a preliminary injunction against Kalshi, requiring geofencing to block users in the state within 30 days.
Other Platforms: Nevada court has ruled that Crypto.com, Robinhood, Polymarket block local users, with new actions planned against Kalshi on February 17.
Coinbase's litigation strategy is probing the legal boundaries of "federal priority" for the entire industry.
Super Bowl Marketing: Controversy Equals Traffic
Coinbase's Super Bowl ad abandoned traditional product promotion, instead displaying Backstreet Boys karaoke subtitles, eliciting mixed reviews:
Adweek: Confusing but eye-catching
USA Today: Voted "worst ad" by consumers
Social Media: Became a hot topic of discussion, with the company stating "some love it, some hate it, but millions sang along"
Armstrong explained on the X platform: "The Super Bowl is an overload of information, the first step is to be seen. Only with attention can we talk about the next steps." Yahoo Finance noted that Coinbase was the only major crypto advertiser this year, in stark contrast to the "Crypto Bowl" lineup of 2022.
Q4 Performance: Transformation Pain and Stable Foundation
Coinbase's Q4 financial report shows early signs of success in its diversified strategy:
Total Revenue: $1.8 billion (QoQ -5%)
Transaction Revenue: $983 million (QoQ -6%)
Subscription and Service Revenue: $727 million (QoQ -3%)
Net Loss: $667 million (GAAP)
Adjusted Net Profit: $178 million
Cash and Equivalents: $11.3 billion
Management emphasizes that new business lines like subscription services, stablecoins (revenue $364 million), and prediction markets are helping to smooth out the volatility of the crypto market. The "Everything Exchange" strategy not only serves existing users but also attracts traditional investors to trade all asset classes in one place.
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This article is from "PASA-Global iGaming Leader," a gambling industry news channel: https://t.me/pasa_news
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