Fantasy sports and sports betting company Underdog has joined forces with Crypto.com to introduce sports prediction markets in 16 U.S. states. The partnership marks a significant move for Underdog, which is leveraging Crypto.com’s financial expertise to launch a product that merges financial trading with sports betting. The goal is to bring more accessible prediction markets to areas where legal sports betting has not yet been adopted.

Underdog Sports Enters Prediction Markets with Crypto.com

Underdog’s CEO, Jeremy Levine, highlighted the potential of prediction markets, describing them as “one of the most exciting developments we’ve seen in a long time.” During a CNBC interview, he emphasized the evolving nature of this new market. “While still new and evolving, one thing is clear — the future of prediction markets is going to be about sports,” Levine said. “No one does sports better than Underdog.”

Underdog is breaking new ground by being the first platform to enter the rapidly growing prediction market space, a hybrid of financial trading and sports betting. Unlike traditional sports betting, where odds are set by bookmakers, prediction markets allow participants to buy and sell contracts based on the outcomes of events, with odds fluctuating based on market movements.

This new venture follows a trend already established by other platforms like Robinhood, Kalshi, and Polymarket, which offer contracts based on sports events. FanDuel and DraftKings have also shown interest, with FanDuel recently partnering with the CME Group to introduce financial events contracts. These new types of markets present lucrative opportunities for operators, particularly in regions where traditional sports betting is still illegal or hindered by local regulations.

Currently, some of the largest U.S. markets, including California and Texas, do not have legal sports betting. Florida, another key state, sees the Seminole Tribe maintaining a near-monopoly on gambling operations through its Hard Rock casinos. This creates a market gap for alternative betting models like prediction markets, which could offer an outlet for those eager to place bets without traditional sportsbooks.

As noted by Citizens gaming analyst Jordan Bender, prediction markets “are too loud to ignore,” with Bender estimating that the sports prediction market could generate $555 million in 2025, as reported by CNBC. In comparison, the legal sports betting market in the U.S. is expected to reach about $16 billion in 2024.

Regulatory Challenges and Future Growth

Sports prediction markets face ongoing legal challenges as regulators, including the Commodities and Futures Trading Commission (CFTC), continue to assess whether these platforms cross into the realm of illegal gambling. This question is particularly pertinent in states where sports betting is tightly regulated or prohibited. The future of prediction markets depends on the outcome of these legal questions, including whether they violate the Indian Gaming Regulatory Act or challenge states’ rights to regulate gambling.

Underdog and Crypto.com’s collaboration is particularly significant because it will feature prediction markets ring-fenced to specific states. For the first time, sports event contracts will not be available nationwide, allowing the companies to cater to markets where traditional sportsbooks cannot operate. Despite the challenges, this move gives Underdog a competitive edge in a burgeoning market.

In a separate development, Crypto.com has also forged a strategic partnership with Trump Media, integrating its digital wallet infrastructure to support the launch of a rewards system on Truth Social and Truth+. This collaboration introduces the Cronos (CRO) token as a utility token across Trump Media’s platforms, enabling users to convert earned rewards into CRO. Crypto.com’s involvement highlights its growing influence in the digital finance space, powering innovative solutions in both social media and streaming industries.

As legal battles unfold, platforms like Kalshi, which launched in January, and Robinhood, which temporarily pulled back from some states due to legal concerns, are also vying for a share of the market. Kalshi has partnered with Robinhood to quickly scale its product and become a leader in the prediction market space, while other platforms, including Polymarket, are expected to return to the U.S. with their own sports prediction offerings in the near future.