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The popular daily fantasy sports site Underdog is in danger of having its license pulled by at least one state regulator.
The Arizona Department of Gaming has threatened to revoke Underdog’s fantasy sports license due to its prediction market involvement. The state regulatory body notified Underdog on Dec. 5 of its intent.
Underdog Fantasy typically ranks either 3rd or 4th in terms of overall DFS market share, far behind the two titans, FanDuel and DraftKings, while competitive with PrizePicks for the remaining top 3 position in many US states. Underdog is among a handful of websites that have either entered the prediction market space or expressed an intent to do so. In the case of Underdog, they recently entered into a partnership with Crypto.com and its recent prediction market offerings.
The Arizona Department of Gaming classifies Crypto.com’s sports event contract offerings as “illegal gambling in Arizona.”
SportsBettingDime first broke the story. That website obtained the email in question.
“ADG has determined that Underdog, by contracting with Crypto, benefitting from Crypto’s services, supporting Crypto’s interests, and providing financial support to Crypto is aiding and abetting Crypto’s illegal conduct in Arizona and providing it with a façade of legitimacy. Moreover, and in the same fashion, Underdog’s relationship with Crypto is an association that poses a threat to the public interest of this State. As a result, the Department hereby provides Underdog notice of its intent to revoke fantasy sports contest operator license FS200008,” a member of the Arizona Department of Gaming wrote in the Dec. 5 notice.
The development is especially intriguing as Arizona became the first US state to welcome BetCRIS, once a behemoth in the offshore sports betting space, especially among professionals and high end gamblers. In fact, BetCRIS is considered among the pioneers of the US-facing offshore sports wagering industry. BetCRIS pulled out of the US market more than 15 years ago, focusing instead on the Latin American online sports gambling and casino sector.
As for Underdog, that company has held a fantasy sports contest operator license in the state since Aug. 23, 2021.
Underdog Fantasy has the option to appeal this decision.
Close to a dozen US states have weighed options to ward off prediction market sites in recent months, claiming these companies infringe upon their own regulatory framework and do not pay taxes. Prediction market firms like Kalshi argue they are regulated by the federally by the Commodity Futures Trading Commission (CFTC) and, as such, can operate in all 50 states.
- Chris Costigan, Gambling911.com Publisher
