Sports Prediction Markets Are Moving Faster Than Anyone Thought
Roundup: More on the deal between Crypto.com and Underdog Sports to launch sports event contracts; Polymarket is cooking up parlays; what's next for the CFTC nominee?
If you had told someone earlier this year that we would have:
Nationwide sports betting…
Point spreads and over-unders available for football games via nationwide sports betting…
Everyone in sports betting, fantasy sports and beyond trying to go live with federally regulated sports betting…
You would have gotten strange looks and people giving you a wide berth. It’s difficult to believe none of this existed a year ago.
But for all the people who thought patience, state laws, and common sense would win the day: Take a lap.
To be fair, all of those things could win out in the long run. But right now, things are moving faster than anyone could have imagined, even after Kalshi rolled out Super Bowl betting in February.
That’s what today’s news — that Underdog and Crypto.com are partnering to bring sports event contracts to 16 states — makes me think about: No one has been prepared for the speed of all this. Other than, I guess, Kalshi, Underdog and Crypto.com! (And Polymarket, which could be launching a sports product in the US in days, weeks or months?)
Whatever pace you think prediction markets are going to expand at, add some zero’s or multiples to it. We’re going to see more operators in the space, and billions change hands in sports betting trading. We’re going to see parlays. We’re going to see player props. All of this is coming, unless the courts somehow bring it all to an abrupt stop.
I think the hype that all of this is going to displace state-regulated sports betting entirely to be a bit overblown. But I do think it’s a compelling offer in places that don’t have legal online sports betting — or much in the way of competition — for better or worse. And the live-trading aspect is superior to sportsbooks.
But Underdog + Crypto is just the start. More of these deals are coming, whether you’re ready or not.
A few more notes on the Underdog/Crypto.com deal that I covered this morning at The Closing Line.
Here is the full press release from Crypto.com:
BROOKLYN, N.Y. — Underdog, the fastest-growing sports company in the U.S., and Crypto.com | Derivatives North America (CDNA), a CFTC-registered exchange and clearinghouse and an affiliate of Crypto.com, today announced that sports event contracts will be accessible to customers through Underdog. CDNA sports event contracts will be powered by Underdog’s technology. This partnership offers American sports fans a secure, federally compliant way to access CDNA sports event contracts and make predictions on the outcomes of their favorite sports events, all within the Underdog app.
“Prediction markets are one of the most exciting developments we’ve seen in a long time,” said Underdog founder and CEO, Jeremy Levine. “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.”
With this launch, customers can express and trade their opinions on sports events contracts across all major sports leagues, including NFL, college football, NBA, MLB, and more. Prices update in real-time, allowing customers to react instantly and express their opinions on what’s going to happen on the field or court.
“We are thrilled to partner with Underdog to enhance the sports experience for customers nationwide with the ability to now trade using Underdog’s technology – all in one app,” said Travis McGhee, Managing Director, Global Head of Capital Markets at Crypto.com. “We were the first to offer sports events contracts, and our technology partnership with Underdog will provide more access to CDNA’s innovative offerings.”
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.
Underdog has gaming licenses in states across the country and has built industry-leading responsible gaming operations, with sophisticated customer protections ingrained into every facet of its platform. Underdog will bring that same level of customer protection and care to prediction market offerings.
Here’s the list of states that Underdog is serving with sports event contracts. This is mostly states that have not legalized sports betting, with a few exceptions:
Alabama
Alaska
Arkansas
California
Georgia
Minnesota
Nebraska
New Mexico
North Dakota
Oklahoma
Rhode Island
South Carolina
South Dakota
Texas
Utah
Wisconsin
Underdog is not partnering with Crypto.com as a registered Futures Commission Merchant. Kalshi, notably, works with Robinhood as an FCM to offer prediction markets. Underdog is working with Crypto.com in a different way — the press release says “CDNA sports event contracts will be powered by Underdog’s technology.” The former general counsel for the Commodity Futures Trading Commission notes that Underdog is working with Crypto “in a tech-provider capacity” and doesn’t seem to have an issue with the logistics (see screenshots below). I understand that the mechanics of the relationship mean that Underdog never technically handles funds for Crypto.com.
I would imagine that Crypto.com (and Underdog) have a bunch of lawyers saying that how they are doing this is OK. The term used on Twitter was “battalions.” Is it actually OK? I guess that’s up to a CFTC that has been loathe to do anything about the rapid expansion of prediction markets to date.
Prediction markets roundup
What’s next for CFTC nominee?: The Senate is back in session, but there has not yet been a “business meeting” scheduled to move forward the nomination of Brian Quintenz, the potential CFTC chair. Things have been quiet over the August recess; could Quintenz find some momentum after the break?
Parlays coming to Polymarket? (Twitter):
The link below is maybe the funniest/most interesting thing I have read about prediction markets to date: “My twitter timeline seemingly overnight turned from can’t lose CFB parlays to crypto prediction market bullposting. I honestly don’t know which is worse at times, as even smart people on prediction market twitter are somehow capable of tweets that rival the ignorance of the lowest IQ of gambling twitter. I’ll break down the PM landscape, where we are and where (I think) we should go, later, but let’s start with the lowest-hanging fruit first.”
“THIS WEEK IN DELUSIONAL TWEETS IN PREDICTION MARKET TWITTER: Prediction Markets Are Going to Reinvent Culturally Appropriate Dinner Conversations”
Honestly, just click through and read the whole thing. You won’t regret it.
