Underdog Withdraws From Missouri Ahead of Launch as Operator Shifts Toward Prediction Markets

Underdog has withdrawn its sports betting application to operate in Missouri just days before the state’s December 1 market launch. Gaming regulators confirmed that the move was driven by the company’s pivot into sports-related prediction markets, a highly debated sector that operates outside state oversight.

The Missouri Gaming Commission confirmed the withdrawal. Mike Leara, executive director of the Missouri Gaming Commission, said that Underdog is looking into prediction markets.

“They have decided to go to that market,” Leara told Fox 2. “It’s not regulated at any level compared to what traditional sports betting is regulated, and obviously, there’s no tax on it.”

The last-minute decision marks a significant shift for Underdog, one of the first operators to apply for a Missouri license. In September, it announced a partnership with the Kansas City Royals to enter the market.

Underdog’s fantasy sports license in the state remains intact.

Eight Platforms Left

Missouri’s sports betting market will launch at 12 a.m. on Monday, December 1. Underdog was one of nine operators that applied for a license.

The remaining eight platforms include BetMGM, Caesars Sportsbook, DraftKings, FanDuel, Circa Sports, bet365, and Fanatics Sportsbook. There’s also ESPN Bet, whose parent, Penn Entertainment, recently shuttered the brand and will replace it with theScore.

Strategic Reorientation for Underdog

Underdog’s pivot into prediction markets began earlier this year when it partnered with Crypto.com to build sports-related prediction markets. Later, through the deal, Underdog started offering parlay-style event contracts in states without sports betting, including Texas and California.

These products resemble sports wagers but operate within a commodities-style framework where outcomes settle as binary contracts.
Prediction markets, and sports event contracts in particular, have expanded rapidly over the past year. However, scrutiny is rising at an equally rapid pace.

Seven states — most recently Maryland — have warned licensed sportsbook operators that participating in federally regulated prediction markets or offering similar event-contract products could jeopardize their betting licenses.

Those warnings emphasize that such markets do not fall under state gaming statutes. The gaming regulators consider them a form of illegal gambling.

The clash between regulators and platforms like Kalshi has led to a series of lawsuits. Active litigation is ongoing in multiple jurisdictions.

An Industry Trend?

Underdog’s Missouri exit places the company in the same strategic stream as operators seeking to carve out space in the prediction market ecosystem while reevaluating traditional sportsbook footprints.

DraftKings and FanDuel recently surrendered their Nevada sports betting licenses. That marked a landmark step for the two largest sports betting operators in the US.

Their withdrawal from Nevada underscored the growing friction between tightly regulated sports wagering and the regulatory ambiguity surrounding sports-related prediction markets.

Prediction markets are subject to federal oversight by the Commodity Futures Trading Commission (CFTC). But, as the Commission has signaled that it won’t stop the growth of sports event contracts, courts will likely decide the matter.

The courts’ decision could take years. That will allow traditional sports betting and daily fantasy operators to enter the segment and gain access to some of the nation’s largest states, which do not have legalized sports betting.

The cumulative effect is a reshaping of how operators allocate resources between mature, highly regulated state betting markets and fast-growing, lightly regulated national prediction-market platforms.