Arizona Warning Put Underdog on Notice Over Prediction Markets

Underdog is trying to expand its brand in the US, but now it is facing a potential showdown in the Copper State.

The Arizona Department of Gaming (ADG) sent a letter warning the state’s online sportsbooks about prediction markets. The sports betting regulator stated that sportsbooks and daily fantasy sports (DFS) operators seeking to enter the sports prediction market will risk having their Arizona licenses pulled.

The letter from the ADG made it clear that the warning included operators who offered the controversial markets, even if that doesn’t include Arizona.

“In addition, even if the licensee is not associated directly with the offering or sale of event contracts to persons in Arizona, its relationship with other persons or entities and conduct in other jurisdictions remains at issue. By way of example only, in determining suitability, the Department will consider any relationship between the licensee (to include its owners, related entities, principals, agents, or employees) and a person or entity offering, enabling, or selling event contracts in Arizona.”

While the ADG sent the letter to all DFS and sportsbook operators, Underdog was clearly the main target of the regulators' wrath. The DFS giant recently partnered with Crypto.com to offer sports prediction markets, though not in Arizona. Underdog has also begun to relaunch controversial pick’em games, which the regulator previously warned against.

Arizona Joins Ohio in Drawing Line on Prediction Markets

Arizona’s letter to operators came almost a month after the Ohio Casino Control Commission (OCCC) sent a similar warning. The midwestern market’s statements came soon after FanDuel announced it would be launching a prediction market platform.

The question now is how operators like FanDuel and Underdog will respond to these thinly veiled threats. While the regulators are hoping it will lead these operators to stick to, and boost, the sports betting and DFS industries. However, operators could decide to abandon their old industries altogether, believing that prediction markets have a brighter future.

While we don’t know what operators will do, we expect more states to begin to try to force their hands before the many legal fights against the industry play out.