Underdog, a DFS and sports betting operator, is set to join the prediction markets surge via a partnership with digital currency exchange Crypto.com, CNBC reports.
The endeavor will see Underdog and Crypto.com offer prediction markets in 16 states, focused in states where sports betting is not yet legal, including the behemoths of California and Texas.
Underdog becomes “the first sports gaming platform to enter the new and rapidly expanding prediction market industry,” CNBC’s Contessa Brewer writes.
“Prediction markets are one of the most exciting developments we’ve seen in a long time,” Underdog founder and CEO Jeremy Levine said in a press release. “While still new and evolving, one thing is clear — the future of prediction markets is going to be about sports — and no one does sports better than Underdog.”
Underdog has been primarily a DFS company with greater sportsbook aspirations. Its draft-style DFS games are available in 40 states, while its pick’ em contests are in most of those as well. Underdog is licensed as a sports betting operator in North Carolina and is expected to launch a sportsbook in Missouri, whose legal sports betting market is slated for a Dec. 1 launch.
Underdog, Crypto.com tout readiness
Crypto.com Derivatives North America (CDNA) is already registered with the CFTC. The sports markets will be provided by CDNA and hosted on Underdog’s platform.
Travis McGhee, managing director and global head of capital markets at Crypto.com, boasts the company was “the first to offer sports events contracts.”
The press release trumpets, “As the only company built on its own proprietary technology across fantasy sports and sports betting regulatory frameworks, Underdog is now the only company offering fantasy sports, sportsbook, and prediction markets in one seamless app.”
With college football underway and the NFL season kicking off this week, the prediction markets space is getting more crowded.
Kalshi, as well its partner Robinhood, are moving full-steam ahead, now offering points spreads, totals and touchdown props, in addition to moneylines and futures. Polymarket, too, is ready to re-enter the US.
Underdog first, likely not last
While Underdog may be first to jump in the sports prediction market waters, larger sports betting operators are circling.
FanDuel last month announced a joint venture with CME Group to launch event-based contract, although sports were conspicuously absent from the announcement. Many industry observers, however, believe that offering sports event contracts is the ultimate goal of the partnership.
DraftKings, meanwhile, has also been exploring paths into the emerging industry, including a potential acquisition of Railbird Exchange, which has been approved as a Designated Contract Market by the CFTC.
How hard will states push back on licensees’ prediction market efforts?
Kalshi, the company leading the charge into prediction markets, is battling multiple states that claim it is illegally operating a sportsbook within their jurisdictions. In fact, 34 states have signed an amicus brief supporting New Jersey’s case against Kalshi.
More recently, Ohio issued a stern warning to sportsbooks that they would be putting their licenses at risk by offering sports event contracts.
In Nevada, the Gaming Control Board grilled FanDuel about its CME partnership, expressing concern that it potentially conflicts with the state’s regulations.
Pushback by states is likely a reason why Underdog is limiting its sports contract offerings to 16 states. As Dustin Gouker points out on The Closing Line Substack, “This marks the first time sports event contracts will be ring-fenced to certain states by design. To date, sports event contracts and indeed all prediction markets are offered nationwide.”
Here’s a list of those 16 states:
- Alabama
- Alaska
- Arkansas
- California
- Georgia
- Minnesota
- Nebraska
- New Mexico
- North Dakota
- Oklahoma
- Rhode Island
- South Carolina
- South Dakota
- Texas
- Utah
- Wisconsin
