CME Group and FanDuel are launching a new prediction market product in the US this December.
Called FanDuel Predicts, the platform will let users wager on various sporting events as well as the price of gas and cryptocurrencies.
Prediction markets let users bet on the likelihood of specific, real-world events, such as how many yards per game a quarterback will throw or what words a publicly traded company might say during an earnings call.
The product will only be available in states where sports betting is not yet legal, Flutter CEO Peter Jackson said during the company’s earnings call on Wednesday.
It will also be excluded from tribal lands in the US.
Flutter is an Irish-American sports betting and gambling company that owns FanDuel.
“FanDuel Predicts unlocks an immediate growth opportunity,” Jackson said. “We believe this new sports opportunity lies solely in these states, as prediction markets are having a negligible impact in the states where FanDuel sportsbook is already available to customers.”
As part of the partnership, CME Group, the world’s largest derivatives exchange, will earn 50% of FanDuel Predict’s gross revenue.
Red-hot wagering
The joint venture is just the latest in a slew of similar launches from games companies and crypto exchanges alike, including DraftKings and Coinbase.
Though pioneered in academic circles, prediction markets have become increasingly popular following the successes of Polymarket and Kalshi late last year.
The two platforms facilitate hundreds of millions of dollars in trades in the run-up to the 2024 US Presidential election. Volumes subsided briefly after the election, but have since come roaring back as the sports season kicks off in the US.
Weekly notional volume for prediction markets in November hit roughly $2 billion, according to data collated on Dune Analytics.
Last week, that figure reached $3 billion and is buttressed primarily by sporting events.
It’s also turned heads among state regulators.
Roll the dice
Several companies have sparred with state gaming authorities in the US over whether they have the authority to regulate prediction markets.
While most prediction market offerings are licensed by the Commodities and Futures Exchange Commission, gaming commissions disagree that the federal agency has sole authority to rein in companies.
On October 24, the New York Gaming Commission issued Kalshi a cease-and-desist letter, alleging that the company was operating in the state without a gaming license.
Kalshi has faced at least seven cease-and-desist orders this year.
Likewise, the Nevada Gaming Control Board issued Crypto.com a cease-and-desist letter in May, ordering the company to stop its offerings in the state.
The crypto firm sued the NGCB in June, and a federal judge denied its request for a preliminary injunction in October.
Crypto.com stopped offering sports event contracts in Nevada on November 3 while it appeals.
And on Wednesday, the NGCB approved the withdrawal of DraftKings’ gaming license applications in the state. Further, Flutter also surrendered its gaming licenses in Nevada over its prediction markets.
“It has been made clear to the Board that Flutter Entertainment [and] FanDuel and DraftKings intend to engage in unlawful activities related to sports event contracts,” the NGCB stated in a notice.
“This conduct is incompatible with their ability to participate in Nevada’s gaming industry.”
Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at [email protected].
