Arizona has taken the unprecedented step of eradicating Underdog’s DFS license over the corporate’s involvement in prediction markets.
The Arizona Division of Gaming (ADG) had beforehand warned licensed firms that doing enterprise with prediction market platforms would threat enforcement motion.
Underdog didn’t heed the warning and entered a partnership with Crypto.com, permitting customers to mix its DFS markets with Crypto.com’s prediction markets.
The operator affords a variety of fantasy sports activities and esports markets, permitting customers to wager on in-game stats for video games like Counter-Strike 2 (CS2), Valorant, and League of Legends.
Arizona First State to Observe By way of on Threats
Along with Arizona, seven different states have warned licensed operators towards launching prediction markets or partnering with platforms.
In its letter to licensed operators in September, the ADG stated that even providing prediction markets outdoors the state risked enforcement motion. Underdog didn’t launch its markets with Crypto.com in Arizona.
Nevertheless, the ADG adopted by means of on its threats and issued a discover to Underdog earlier this week, stating it’s “aiding and abetting Crypto’s unlawful conduct in Arizona and offering it with a façade of legitimacy. Furthermore, and in the identical vogue, Underdog’s relationship with Crypto is an affiliation that poses a risk to the general public curiosity of this State.“
Crypto.com has withdrawn from Arizona, in addition to different states which have warned operators over the usage of prediction markets. This consists of Michigan, Maryland, Massachusetts, Illinois, New Jersey, Nevada, and Ohio.
Whereas no state has forcibly eliminated an operator’s license till now, FanDuel and DraftKings took the preemptive motion of withdrawing their licenses from Nevada as they put together to launch prediction market platforms.
PrizePicks and Fanatics Licenses Additionally At Threat
Analysts at Residents say that extra operators might face the identical motion as Underdog, notably PrizePicks and Fanatics.
Fanatics holds a gaming license within the state, however has launched its personal prediction market platform, Fanatics Markets.
PrizePicks, in the meantime, has partnered with each Kalshi and Polymarket, launching markets with the previous for now. Like Underdog, PrizePicks holds a DFS license in Arizona.
The Compliance and Extra substack quoted analysts at Residents as stating, “We don’t imagine the Underdog/Crypto.com relationship is exclusive within the sense that regulators went after this platform for a sure purpose. Relatively, it’s only a matter of time earlier than Arizona strips the licenses of different operators within the state.”
The analysts added, “The 2 main firms we imagine this may influence are Fanatics, with a high-single-digit deal with market share in Arizona (gaming license), and PrizePicks (fantasy license).”
FanDuel and DraftKings, additionally licensed in Arizona, should not believed to be vulnerable to dropping their licenses, for now.
Nevertheless, the motion in Arizona might set a precedent for different states to comply with as they try to handle the emergence of prediction markets.
