SAN JUAN, P.R. – The Arizona Department of Gaming (ADG) reportedly told Underdog on Dec. 5 that its right to offer daily fantasy sports will be revoked, which would make the platform the first to lose a state license for being involved with prediction markets.
The story was first reported by Sports Betting Dime Saturday, and the details of it were confirmed by Underdog to InGame.
The ADG reportedly told the company that it considers Underdog’s partnership with Crypto.com to launch a sports events markets “illegal gambling.” The companies have partnered to offer these markets in 24 states.
Underdog Markets is not available in Arizona, meaning that the state also becomes the first to banish a company that offers prediction markets in another. Arizona was among numerous states to issue letters to operators warning of possible repercussions up to revoking a license for offering prediction market in another jurisdiction. Underdog does not have a sports betting license in Arizona.
Chris Kotterman of the Arizona governor’s office, told InGame at the National Council for Legislators from Gaming States on Saturday that the Underdog ban stemmed from unlicensed activity by Crypto.com.
“I think this one was unique because it’s conduct was focused in Arizona,” he said.
“We know that Crypto.com was offering contracts in Arizona. We told them to stop and then Underdog partnered with them. And so that’s the problem.”
Per Sports Betting Dime ADP wrote in a Dec. 5 letter to Underdog: “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.”
What about Fanatics and PrizePicks?
Fanatics, which is licensed to offer sports betting in Arizona, launched a prediction market last week. PrizePicks, which offers DFS there, launched a prediction market in conjunction with Kalshi in November. Neither are live in Arizona.
Betr, DraftKings, and FanDuel, who are licensed to offer sport betting in Arizona, plan to launch prediction models through partnerships that they say grants them federal licensure under the Commodity Futures Trading Commission.
An Underdog source indicated that the company will appeal. It has until 30 days following the Dec. 5 notice to do so.
Underdog no longer offers traditional sports betting anywhere in the U.S. after withdrawing from its license in Missouri and announcing it will shutter in North Carolina next week. It held a DFS license in Arizona since Aug. 23, 2021.
