Arizona targeting Underdog’s license, report says

• Underdog warned by Arizona’s gaming regulator ot may lose its gaming license in the state
• The rift is tied to prediction markets, but specifically points out to Crypto.com as Underdog’s partners in an out-of-state venture
• Underdog has so far signaled readiness to drop betting and DFS licenses to maintain prediction market momentum

Betting and gaming companies are in the throes of a dilemma. Toe the regulatory line without exploring new product options, and you will be in the watchdogs’ good graces.

But in doing so, you may lose your competitive advantage, and what could be the difference between staying profitable and successful and falling behind.

Prediction markets cause another rift with gaming regulators for Underdog

In business, the logic is to swim against the tide and embrace products and solutions that make sense, continually probing regulators’ patience.

Underdog, a DFS and sports betting company that now has overt ambition for the prediction market vertical, seems to have chosen the latter.

Several weeks ago, Underdog dropped out of the Missouri sports betting race over its plans to start offering prediction markets instead.

The company pulled the plug in the final days before the rollout, signalling its confidence that the Kalshi-dominated segment would constitute a better business solution. It is not alone.

Mainstream betting companies have been quick studies. Fanatics, FanDuel, and DraftKings have all dropped out of individual states or the American Gaming Association, the country’s largest trade group.

Now, Underdog is reportedly facing more legal pushback as it seeks to embrace prediction markets.

The Arizona Department of Gaming (ADG) reportedly contacted the operator on December 5 and told the company that it risks losing its state license if it engages in prediction markets in the United States or in general.

The regulatory casus belli is Underdog’s partnership with Crypto.com, with the companies teaming up to bring prediction markets through Underdog Markets. Even though this new platform, available in 24 states, is not accessible in Arizona, the local gaming regulator has taken issue with the fact that it exists in the first place, as reported by Sports Betting Dime originally.

Crypto is the issue, argues Arizona's watchdog

InGame, another prominent industry publication, got in touch with Chris Kotterman of the Arizona governor’s office, who clarified the situation and put some speculation to rest.

The issue was Crypto.com, which was considered to still be offering unlicensed products in the state. The official letter sent to Underdog by the department read exactly as this:

"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."

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