Underdog Launches In-House Prediction Market Exchange, Expanding Betting Options

Underdog, a prominent player in the daily fantasy sports (DFS) arena, has officially launched its own prediction market exchange. This move signifies a significant step towards vertical integration, allowing the company to exert greater control over the economics associated with trading event contracts. The announcement follows Underdog’s acquisition of Aristotle Exchange DCM, Inc. and Aristotle Exchange DCO earlier this year, which provided the necessary foundation for establishing federally regulated prediction markets.

Regulatory Oversight and Expansion

The newly established prediction market exchange is wholly owned and operated by Underdog, and crucially, it is licensed by the Commodity Futures Trading Commission (CFTC). This regulatory approval is vital for prediction markets operating in the United States. The CFTC’s oversight ensures that these markets adhere to federal regulations, providing a layer of security and legitimacy for participants.

This development offers Underdog customers enhanced opportunities to express their views on a wide range of subjects, including sports, culture, and more, all within the familiar interface of the Underdog app.

A Shift Towards Vertical Integration

Underdog’s foray into operating its own exchange is part of a broader trend within the gaming and financial services industries. Companies are increasingly recognizing the value of vertical integration to gain more control over their platforms and revenue streams. This approach allows for greater economic control over transactions.

This strategy mirrors moves by other industry giants. For instance, DraftKings (NASDAQ: DKNG) recently launched its DKeX exchange, aiming for similar enhanced economic control over its prediction offerings. By possessing both Designated Contract Market (DCM) and Derivatives Clearing Organization (DCO) permits, and also being a registered Futures Commission Merchant (FCM), Underdog stands out as the first sports company to hold this complete set of prediction market licenses.

CEO Jeremy Levine expressed enthusiasm about the new exchange, stating, “Now with our own exchange, we’re going to unlock so much for more sports fans. Prediction markets are largely about sports, and Underdog is the best at sports.” This sentiment underscores the company’s belief in its ability to leverage its sports expertise to dominate the prediction market space.

Market Performance and Availability

Since its initial prediction market launch last September, Underdog has seen substantial activity, with a notional volume nearing $6.5 billion. This impressive figure positions Underdog as the third-largest operator in the U.S. prediction market space, surpassing several well-known competitors.

Despite its expansion, Underdog’s prediction market is not accessible in all U.S. jurisdictions. Notably, it is unavailable in 13 U.S. states, including Nevada and Washington, D.C. Potential users in these excluded regions will need to monitor future announcements for potential market access.

Key facts

The launch of Underdog’s in-house prediction market exchange is a significant development for sports bettors and enthusiasts looking for new ways to engage with sporting events. By offering a regulated and integrated platform, Underdog is positioning itself as a leader in the evolving prediction market landscape. This move provides users with more avenues for wagering and allows the company to capture greater value from these activities.

Source: Casino.org News – https://www.casino.org/news/underdog-debuts-prediction-market-on-in-house-exchange/