How Do Gambling Laws Influence Cryptocurrency Prices?
Publication Date
9-9-2025
Abstract
This paper documents a triangular trade through cryptocurrencies that enables bettors to access legally restricted gambling markets. We investigate how cryptocurrency prices respond to changes in US gambling law. A major Supreme Court decision and subsequent state laws expand legal sports betting markets, motivating substitution from cryptocurrencies to the dollar. Using these natural experiments to implement stacked event studies, we find cryptocurrencies have substantial negative cumulative abnormal returns of -40\% to -9\% when legal gambling markets expand. The findings suggest cryptocurrency prices reflect their usefulness in circumventing legal restrictions, connecting regulation of real markets with exchange rates.
Document Type
Article
Keywords
Cryptocurrency, Gambling Law, Sports Betting, Casinos, Exchange Rates
Disciplines
Finance
Source
SMU Cox: Finance (Topic)
Language
English
