Full Breakdown
The Rise of Prediction Markets in Sports Betting
9/5/2025, 2:38:49 PM
Underdog Sports Enters Prediction Markets
Underdog Sports has launched a new prediction market platform in collaboration with Crypto.com, allowing users in 16 states to trade on sports event contracts. This initiative targets states where traditional sports betting remains illegal, including Alabama, Alaska, Arkansas, California, Georgia, Minnesota, Nebraska, New Mexico, North Dakota, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Utah, and Wisconsin. Of these, seven states already permit some form of sports betting. The contracts will utilize Underdog's technology and are legally supported by Crypto.com’s derivatives trading arm, CDNA, which is registered with the Commodity Futures Trading Commission (CFTC). Jeremy Levine, CEO of Underdog, expressed optimism about the future of prediction markets in sports, stating, “While still new and evolving, one thing is clear – the future of prediction markets is going to be about sports.”
Controversy Surrounding Prediction Markets
Despite the excitement surrounding prediction markets, they have faced significant scrutiny. Critics argue that these markets are essentially a form of sports betting in disguise, as users wager against one another rather than a house. The NFL has raised integrity concerns similar to those associated with traditional sports betting. Kalshi, another prediction market platform, has encountered pushback from state regulators, leading to lawsuits in New Jersey, Nevada, and Maryland. The CFTC's former commissioner, Kristin Johnson, warned of the dangers posed by unregulated prediction markets, including increased problem gambling and potential spot-fixing. Johnson emphasized the need for careful regulation, stating, “Deciding the course for financial markets and financial markets regulation simply requires remembering why we regulate and the catastrophic consequences that may follow if we fail to regulate well.”
Industry Response and Future Implications
The rise of prediction markets has prompted responses from major sports leagues and traditional sportsbooks. FanDuel has announced a partnership with CME Group to explore prediction markets, although it will initially exclude sports. The landscape is further complicated by the involvement of high-profile figures such as Donald Trump Jr., who has taken advisory roles with Kalshi and Polymarket, indicating a financial interest in the success of these markets.
As prediction markets gain traction, they may disrupt the existing sports betting industry. States that have relied on tax revenue from traditional sports betting may face financial challenges, as prediction markets do not contribute to state taxes. This shift could lead to increased reliance on federal funds, complicating budget planning for many states.
Verbatim Quotes
- “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,” — Jeremy Levine, CEO of Underdog Sports
- “Deciding the course for financial markets and financial markets regulation simply requires remembering why we regulate and the catastrophic consequences that may follow if we fail to regulate well,” — Kristin Johnson, former CFTC Commissioner
Conflicting Reports & Gaps
There is a notable divide in perspectives regarding the classification of prediction markets. While proponents argue they are distinct from traditional sports betting, critics maintain that they share significant similarities. Additionally, the CFTC's capacity to regulate this burgeoning industry remains uncertain, raising questions about the potential for oversight and consumer protection.
As prediction markets continue to evolve, the implications for the sports betting landscape and regulatory frameworks will be critical to monitor.
