Underdog Collaborates with Crypto.com to Introduce Prediction Markets
Underdog, a prominent player in the gaming industry, has teamed up with Crypto.com to introduce prediction markets through its app. This partnership marks a significant step as Underdog becomes the first gaming company to roll out a futures product amid an evolving landscape of legal sports betting. The announcement was made on Tuesday, revealing that Underdog will now offer sports markets on the Crypto.com | Derivatives North America (CDNA) exchange, which is registered with the Commodity Futures Trading Commission (CFTC). This integration allows Underdog users to engage with sports prediction markets using U.S. dollars, enhancing their experience alongside existing fantasy and gambling offerings.
Significance of the Collaboration
This collaboration is also noteworthy for Crypto.com, which was the pioneer in launching such sports prediction market contracts in the United States, surpassing competitors like Kalshi last year. However, Crypto.com has been relatively low-profile in recent months as Kalshi and Polymarket aggressively expand their market presence and product offerings. The rise of prediction markets has been one of the most significant developments in the gambling sector this year, with proponents arguing that these contracts function similarly to other financial instruments. In contrast, critics suggest that these exchanges might be circumventing existing sports betting regulations, creating a product that is virtually indistinguishable from traditional betting.
Non-Exclusive Partnership Dynamics
It is important to note that the partnership between Underdog and Crypto.com is non-exclusive, as confirmed by a representative from Underdog. This arrangement allows Crypto.com the freedom to collaborate with other entities, thereby broadening its reach in the market. However, details regarding the financial aspects of the partnership, such as revenue sharing or other economic arrangements, were not disclosed. While Underdog is pioneering the integration of prediction markets within a licensed U.S. gaming framework, other major players are closely evaluating their potential options. Recently, FanDuel announced a partnership with CME Group, which operates four CFTC-regulated exchanges, a move that could set the stage for its own participation in the prediction market space. DraftKings CEO Jason Robins has also expressed interest in exploring similar initiatives. The response of sports betting regulators across the U.S. to the emergence of companies offering both betting and prediction market products remains to be seen, making Underdog’s actions a focal point for the industry.
Crypto.com’s History and Recent Developments
Crypto.com made its entry into the sports prediction market in December 2024 but faced scrutiny when it chose to disregard an order from CFTC regulators during the last month of the Biden administration to remove these contracts. After attempting to promote its contracts linked to the Super Bowl through media engagements, the company has since maintained a low profile regarding its prediction markets. Compared to its competitor Kalshi, Crypto.com has been slower in diversifying its market types and has allocated minimal resources towards marketing efforts, while Kalshi has been actively promoting its offerings. The organization has consistently declined to comment or provide interviews concerning industry developments.
Underdog’s Growth and Market Position
Established in 2020 as a fantasy gaming platform, Underdog has begun venturing into more conventional sports betting, which comes with its own regulatory considerations. The company has experienced significant success in both social media and digital platforms, showcasing partnerships like a podcast featuring Bill Belichick. Earlier this year, Underdog announced a funding round exceeding $70 million, which valued the company at $1.23 billion, placing it among the few global sports gaming unicorns, according to reports. This funding round was led by Spark Capital, known for backing notable companies such as Twitter and Slack. The company also boasts a roster of high-profile investors, including sports and entertainment figures like Mark Cuban and Kevin Durant.
CFTC Changes and Industry Implications
As the popularity of sports futures markets has surged, the CFTC has also experienced significant changes. The nomination of Brian Quintenz, a board member of Kalshi and former President Trump’s candidate to lead the commission, has been stalled for over a month. Under the interim leadership of Caroline Pham, the commission has shown a more lenient approach towards sports prediction markets, a development that many observers anticipated given Donald Trump Jr.’s involvement as an advisor and investor in Kalshi and Polymarket. Recently, Crypto.com formed a partnership with Trump Media & Technology Group to establish a new cryptocurrency treasury firm, further intertwining its ventures with political and financial dynamics. The CFTC has yet to comment publicly on Crypto.com’s noncompliance with prior directives issued under former chairman Rostin Behnam, and indications suggest that resource constraints may soon affect the agency’s enforcement capabilities.
Crypto.com’s Efforts to Expand Prediction Markets
Recently, it appeared that Crypto.com was preparing to enhance its prediction market offerings, as evidenced by the hiring of Chris Fargis as the new director of sports and prediction markets. Fargis, who brings experience from his previous roles at DraftKings and Fanatics, expressed enthusiasm for the burgeoning category on LinkedIn, indicating that exciting developments are on the horizon for the company.
