Underdog and Crypto.com Bet Big on a Legal Gray Area in Sports Prediction Markets

Underdog, a rising star in the sports gaming industry, has announced a partnership with Crypto.com to launch sports prediction markets in 16 U.S. states, primarily those where legal sports betting remains unavailable. The collaboration represents a strategic entry into the rapidly expanding prediction market space, which blends elements of financial trading with sports betting. This partnership is notable for its focus on regions such as California and Texas, where traditional sports betting is not yet legal. By offering a federally compliant alternative, the venture aims to capture a growing consumer base eager for new ways to engage with sports outcomes [5].

The partnership enables Underdog users to trade contracts based on the outcomes of major sports events, including leagues like the NFL, NBA, and MLB. These contracts function as binary derivatives, with prices fluctuating in real time based on market sentiment. Underdog CEO Jeremy Levine emphasized the potential of prediction markets, calling them “one of the most exciting developments in a long time” and highlighting Underdog’s unique position in the sports industry [5]. Travis McGhee, Global Head of Capital Markets at Crypto.com, noted the partnership’s ability to enhance the customer experience by integrating trading capabilities directly into Underdog’s app [5].

Crypto.com’s involvement in this venture is significant, as it was among the first to introduce sports prediction markets in the U.S. in late 2024. The company has a registered exchange with the Commodity Futures Trading Commission (CFTC), which lends a layer of regulatory credibility to the product. However, the broader legal landscape for sports prediction markets remains uncertain. Regulators and legal experts continue to debate whether these contracts fall under the CFTC’s exclusive jurisdiction or are subject to state-level gambling laws. This ambiguity has led to ongoing legal challenges, with states such as New Jersey, Nevada, and Ohio issuing cease-and-desist orders to platforms like Kalshi and Robinhood [5].

Despite these challenges, the market for sports prediction contracts is growing in popularity. Analysts like Jordan Bender of Citizens estimate that the sports prediction market could generate $555 million in 2025, a significant but still modest figure compared to the projected $16 billion legal online sports betting market in 2024 [5]. The appeal of prediction markets lies in their structure: unlike traditional sports betting, where odds are set by bookmakers, prediction markets allow participants to trade contracts based on market demand, with prices reflecting real-time probabilities [1].

The partnership between Underdog and Crypto.com is also noteworthy for its regional focus. By restricting the availability of sports event contracts to specific states, the companies aim to navigate the complex regulatory environment while catering to markets underserved by traditional sportsbooks. This approach differentiates the product from existing prediction markets, which are typically available nationwide. It also positions Underdog to capitalize on a niche market, particularly in areas where tribal casinos hold legal monopolies or state legislation restricts traditional betting [5].

The partnership is part of a broader trend of expansion in the prediction market space. Other platforms, including Kalshi, Robinhood, and Polymarket, are also vying for market share. Meanwhile, established sports betting operators like FanDuel and DraftKings are exploring similar opportunities, with FanDuel recently partnering with CME Group to develop new event-based contracts. As the industry evolves, regulatory clarity will play a critical role in determining the long-term viability of these products. In the meantime, companies like Underdog and Crypto.com are betting on a future where prediction markets become a standard offering for sports fans across the country [5].

Source:

[1] title1 (https://www.bettingusa.com/sports/prediction-markets/)

[2] title2 (https://www.sportsbettingdime.com/news/college-football/north-carolina-vs-tcu-parlay-picks-for-bill-belichicks-college-debut/)

[3] title3 (https://news.worldcasinodirectory.com/underdog-partners-with-crypto-com-to-offer-sports-prediction-markets-119634)

[4] title4 (https://www.cryptotimes.io/2025/09/02/underdog-crypto-com-launch-sports-prediction-markets-nationwide/)

[5] title5 (https://www.cnbc.com/2025/09/02/cryptocom-and-underdog-partner-to-offer-sports-prediction-markets.html)

[6] title6 (https://www.sportico.com/business/sports-betting/2025/underdog-predictions-futures-markets-crypto-com-deal-1234869020/)

[7] title7 (https://www.sportsbettingdime.com/news/betting/underdog-crypto-com-launch-sports-prediction-market/)