Full Article highlighting portfolio company, Underdog.
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Fantasy and sports gaming operator Underdog is partnering with Crypto.com to offer sports prediction markets in 16 states, mostly focused on where legal sports betting has not been adopted, the companies told CNBC on Tuesday.
“Prediction markets are one of the most exciting developments we’ve seen in a long time, ” Underdog founder and CEO Jeremy Levine said on CNBC’s “Worldwide Exchange” Tuesday. “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 is the first sports gaming platform to enter the new and rapidly expanding prediction market industry, which is a modern chimera of financial trading and sports betting: Traders buy and sell the outcome of sporting events, but the odds change according to market movements, and there’s no bookmaker.
Robinhood, Kalshi and Polymarket already offer sports events contracts.
FanDuel, owned by Flutter, announced earlier this month that it would partner with the CME Group to offer financial events contracts. DraftKings CEO Jason Robins has also told CNBC he’s interested in entering the fray.
Sports events contracts could be especially lucrative for platforms that bypass state gaming regulators and tribal pushback.
The nation’s most populous states, California and Texas, do not offer legal sports betting. In Florida, the third most populous state, the Seminole Tribe has a near monopoly on legal gambling through its Hard Rock casinos and sportsbooks.
These markets remain inaccessible to legal sportsbooks, and the tribes have demonstrated a commitment to fending off what they consider to be a competitive threat to their sovereign rights.
The Commodities and Futures Trading Commission and federal courts are still grappling with the question of whether sports predictions markets are sports gambling, as well as whether they encroach on states’ right to regulate sports gambling or if they violate the Indian Gaming Regulatory Act.
Still, as Citizens gaming analyst Jordan Bender wrote in April, “prediction markets are too loud to ignore.”
He estimated that the sports prediction market could generate $555 million this year. The legal online sports betting market generated about $16 billion in 2024, according to Bender.
The sport events contracts will be provided by Crypto.com Derivatives North America (CDNA) — an exchange that’s already registered with the CFTC — but hosted on Underdog’s platform and fueled by its technology, the companies said.
“We were the first to offer sports events contracts, and our technology partnership with Underdog will provide more access to CDNA’s innovative offerings,” said Travis McGhee, managing director and global head of capital markets at Crypto.com.
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