PrizePicks Gains Key Approval to Offer Prediction Markets

The world of prediction markets is about to get a little more crowded.

Daily fantasy sports giant PrizePicks received approval from the National Futures Association to become a Futures Trading Merchant (FCM). This means the operator can offer prediction markets without needing a partner, such as Robinhood or Crypto.com. The company is the first DFS operator to gain FCM approval; however, it has not confirmed whether sports will be one of the markets offered.

Earlier this week, it was announced that Allwyn had purchased a $1.6 billion stake in PrizePicks. The European lottery giant made the move to expand its presence outside the lottery industry, which it accomplished this week.

PrizePicks is the first DFS operator to become an FCM, they aren’t the first to enter the industry. Underdog has already begun offering sports prediction markets in some states, thanks to a partnership with Crypto.com. 

More DFS operators are expected to explore entering the emerging prediction market space over the next year. With states like California deciding to crack down on the DFS industry, operators like Underdog and PrizePicks are seeking ways to replace the rapidly shrinking sector. 

PrizePicks has yet to confirm when they will begin offering prediction markets or what types will be available.

DFS Operators Take Big Risks With Prediction Markets

While prediction markets remain legal and have influential allies in Washington, D.C., some states are taking action to halt the controversial industry's expansion. Arizona, Nevada, and Ohio have all warned sportsbook and DFS operators against offering sports prediction markets. 

The letter made it clear that state licenses could get pulled if the controversial markets are available anywhere in the US, even if they aren’t available in the three states. That means PrizePicks could lose the ability to operate its DFS platform in those markets. As a result, failure in the prediction market space could also lead to the DFS business failing, bringing significant risk for all operators.