Full Breakdown
Underdog and Crypto.com Launch Sports Prediction Markets in 16 States
9/3/2025, 1:23:41 PM
Overview of the Partnership
Underdog, a fantasy sports and sports betting operator, has partnered with Crypto.com to introduce sports prediction markets across 16 U.S. states, primarily targeting areas where traditional sports betting remains illegal. This collaboration marks a significant development in the gaming industry, as it allows users to trade contracts based on the outcomes of major sports events, including the NFL, NBA, MLB, and college football.
Mechanics of Prediction Markets
The prediction markets will operate through Crypto.com Derivatives North America (CDNA), a registered exchange with the Commodity Futures Trading Commission (CFTC). Unlike traditional sportsbooks, which rely on bookmakers to set odds, these markets allow users to buy and sell contracts whose prices fluctuate based on market activity. This structure enables participants to engage in trading without the need for state gaming licenses, presenting a novel approach to sports wagering.
Key States and Market Accessibility
The 16 states where these prediction markets will be available include Alabama, Alaska, Arkansas, California, Georgia, Minnesota, Nebraska, New Mexico, North Dakota, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Utah, and Wisconsin. Notably, many of these states either have limited or no legal sports betting options, creating a unique opportunity for Underdog to capture a previously untapped audience.
Industry Context and Competition
Underdog's entry into prediction markets positions it alongside other platforms like Kalshi, Robinhood, and Polymarket, which have also ventured into event-based contracts. However, Underdog's established user base in fantasy sports provides a competitive advantage. The partnership with Crypto.com is particularly strategic, as it leverages existing regulatory frameworks to navigate the complex landscape of U.S. gambling laws.
Regulatory Challenges and Concerns
Despite the innovative nature of prediction markets, they face scrutiny from regulators and tribal gaming interests. Questions remain regarding whether these markets constitute gambling and how they align with state rights under the Indian Gaming Regulatory Act. Several states have already issued cease-and-desist orders to other prediction market operators, indicating potential legal challenges ahead.
Official Statements
Jeremy Levine, CEO of Underdog, emphasized the significance of this venture, stating, “Prediction markets are one of the most exciting developments we’ve seen in a long time. While still new and evolving, one thing is clear — the future of prediction markets is going to be about sports.” Travis McGhee, managing director at Crypto.com, echoed this sentiment, noting, “We were the first to offer sports events contracts, and our technology partnership with Underdog will provide more access to CDNA’s innovative offerings.”
Criticism and Opposition
Critics argue that prediction markets may circumvent existing gambling regulations, leading to an uneven playing field compared to traditional sportsbooks. Concerns have been raised about the potential for these markets to infringe on tribal rights and state sovereignty over gaming laws. As the industry evolves, the response from regulators will be crucial in determining the future of prediction markets.
What's Next for Prediction Markets?
As Underdog and Crypto.com roll out their prediction markets, the industry will be closely monitoring regulatory responses and market adoption. The potential for these markets to reshape the landscape of sports engagement and betting is significant, with analysts projecting revenues could reach $555 million by 2025. The success of this initiative may pave the way for further innovations in the intersection of sports, finance, and technology.
