Underdog Launches Own Prediction Market, But it isn’t Quite All In
On Saturday, Underdog announced that it launched its own prediction market product. Previously, Underdog had hosted prediction markets on its platform as a partner to other exchanges. Now, it owns its own exchange, so it controls the product and revenue from top to bottom.
However, Underdog is being a bit cautious with its rollout. While other prediction markets like Kalshi have infamously advertised the availability of betting in all 50 states, Underdog launched its prediction market in 38 states.
While it’s avoiding some of the most ardent anti-PM states, that doesn’t seem to be a uniform strategy.
Underdog’s prediction markets appear to be only sports or sports-adjacent, for now. Oddly, the operator still appears to be separating player deposits into two buckets: fantasy/pick ’em and predictions. Players have two different wallets, and each one can only be used for the corresponding product.
Underdog Continues Embrace of Prediction Markets
Underdog was eager to jump into the prediction game. Before prediction markets started rolling in billion-dollar valuations, Underdog was among the first sports-native operators to begin offering them.
Last September, Underdog partnered with Crypto.com, putting markets from that exchange on its popular fantasy sports and pick’em app. That put Underdog months ahead of FanDuel and DraftKings, which launched their prediction products late in the year.
Underdog had been slowly trying to build up a traditional online sports betting product. It was only operating in North Carolina, but it had applied for a Missouri license.
The company opted for a hard pivot into prediction markets, though. The allure was obvious. Option A, the route the company was on, meant trying to compete with the two sports betting titans that collectively own around 80% of the market. Option B allowed Underdog to beat them to market in this new vertical. One that had the additional benefit of sidestepping state taxes.
The strategy meetings picking between these two paths probably didn’t involve much debate.
The obvious next move for Underdog was to acquire or build its own exchange. It purchased Commodity Futures Trading Commission-registered Aristotle Exchange in March, signaling that it preferred that shorter path, as opposed to building an exchange and then getting CFTC licensing. The latter process alone can take many months, even in today’s expeditious regulatory environment.
Underdog Avoiding Offering Predictions in Certain States
Still, Underdog is showing some caution with its rollout. It advertises prediction market availability in all but the following states:
- Arizona
- Nevada
- Colorado
- Michigan
- Ohio
- Kentucky
- Tennessee
- Mississippi
- Pennsylvania
- Maryland
- New Jersey
- Massachusetts
Many of these states have been the most aggressive in trying to police prediction markets. Arizona notably filed criminal charges against Kalshi. Michigan succeeded in securing a court order that Kalshi geofence the state, though that is the subject of serious discord at the moment, as the CFTC is trying to put its foot down to stop the order.
The strategy isn’t uniform, though, as Underdog is offering its prediction markets in some very PM-unfriendly states. It’s serving Minnesota, which outright banned prediction markets. Washington has also litigated aggressively against prediction markets, but Underdog lists it as an available state.
While some lauded Underdog’s strategy, sports betting content creator “Captain Jack Andrews” was left openly wondering why Underdog would eschew some markets when its business model has the backing of the current administration.
No Culture, Weather, or Other Prediction Markets on Underdog
Underdog is sticking to what it knows, for now. The prediction markets are available in Underdog’s app, and the only available markets fall into a few categories:
- Sports
- Esports (markets are available for six different games)
- “Mind sports” (Chess)
The word sports appeared 13 times in Underdog’s four-paragraph press release touting the launch of its own exchange.
“With our own exchange, we’re going to unlock so much more for sports fans,” said CEO Jeremy Levine. “Prediction markets are largely about sports, and Underdog is the best at sports.”
Certain other prediction markets might dispute the vertical being largely about sports. The numbers say that’s absolutely the case — sports generally account for at least 80% of the volume at PMs — but prediction operators have worked hard to fight the perception that they’re little more than federally regulated sportsbooks.
Underdog appears to harbor no such illusions.
For now, the only market that isn’t explicitly covering a contest of some kind is one speculating on LeBron James’ next team.
Still, the press release does say that Underdog customers can “express their opinions on sports, culture, and beyond.” So, this dynamic might change at some point.
Players trust our reporting due to our commitment to unbiased and professional evaluations of the iGaming sector. We track hundreds of platforms and industry updates daily to ensure our news feed and leaderboards reflect the most recent market shifts. With nearly two decades of experience within iGaming, our team provides a wealth of expert knowledge. This long-standing expertise enables us to deliver thorough, reliable news and guidance to our readers.
Latest News
