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Read Full BioThrough its partnership with Crypto.com, Underdog has found a way to offer parlays in states with no legal sports betting, including California and Texas.
The two companies announced a deal this week ahead of the new football season, and the benefits of combining DFS and prediction markets are already evident.
Underdog’s platform will make Same Game Parlays (SGP) available, which combine Crypto.com’s federally licensed moneyline markets with Underdog’s fantasy prop markets.
An example, flagged by 50¢ Dollars, shows a parlay on the opening NFL game of the season, Dallas Cowboys at Philadelphia Eagles. Users can combine the moneyline, a wager on the Eagles to win, with a selection of Underdog fantasy markets.
In this example, the user successfully predicted Dak Prescott would have under 255.5 combined rushing and passing yards. The final leg of the 3-way parlay brought up a winning bet with Saquon Barkley recording one rushing touchdown.
The markets are currently available in 16 states, including Texas and California. Sportsbooks, prediction markets, and DFS operators have been battling with lawmakers in the country’s two most populous states, which do not officially allow sports betting.
The other states in which the partnership is active are:
- Alabama
- Alaska
- Arkansas
- Georgia
- Minnesota
- Nebraska
- New Mexico
- North Dakota
- Oklahoma
- Rhode Island
- South Carolina
- South Dakota
- Utah
- Wisconsin
Prediction Markets Pushing Boundaries
When announcing the partnership, Travis McGhee, Managing Director, Global Head of Capital Markets at Crypto.com, said: “We are thrilled to partner with Underdog to enhance the sports experience for customers nationwide with the ability to now trade using Underdog’s technology – all in one app.”
“We were the first to offer sports events contracts, and our technology partnership with Underdog will provide more access to CDNA’s innovative offerings.”
This is already evident in the unique combination of the two primary ways companies can legally offer sports betting without a sports betting license.
Along with Crypto.com, Kalshi has also been pushing the boundaries with the expansion of markets. It self-certified parlays this week, adding to moneylines, totals, point spreads, and touchdown prop bets.
Partnership Unique Position
The ability of Underdog to use its already present fantasy markets can accelerate the expansion of markets without the need for additional self-certification filings.
Prediction market platforms have to notify the Commodity Futures Trading Commission (CFTC) when creating new Designated Contract Markets (DCM). Although the CFTC has so far not objected to any self-certifications, it remains a more cumbersome process, which Crypto.com is now bypassing by partnering with Underdog.
One drawback may be the reduced liquidity of the markets. As seen in the betslip above, the maximum ‘entry’ (not bet) is $50. The Crypto.com markets should, in theory, be matched with other users’ predictions on the market. The Underdog fantasy markets, meanwhile, have been limited in some states.
Will States Challenge The Legality Of Markets?
Prediction markets and DFS have both faced mounting pressure over accusations that they are unlicensed sports betting. Crypto.com has been issued cease-and-desist letters in five states, although the partnership is not launching in any of these.
Underdog, meanwhile, has been forced to offer a limited version of its products in various states, including New York, where it was fined $17.5 million.
The company recently withdrew its against-the-house version of Pick’em from California in response to Attorney General Rob Bonta declaring DFS illegal. It is not quite clear how the fantasy markets in the parlays are matched. If Underdog is accepting liability for the bets, then this will undoubtedly be challenged by the state.
Even if the bets are matched peer-to-peer, then it will surely not be long before states are protesting and issuing cease-and-desist letters.
