The U.S. prediction markets space is heating up, and a brand-new partnership between Crypto.com and Underdog could be the most disruptive move yet. Announced in early September 2025, the deal makes Underdog the first major sports gaming operator to embed a federally regulated prediction market exchange directly inside its app.
For bettors, it means the chance to trade contracts tied to sports outcomes across the NFL, NBA, MLB, and college football. A major shift that could reshape how U.S. sports fans speculate on games. For the industry, it raises bigger questions: Can Underdog and Crypto.com take on Kalshi and Polymarket, the two platforms that have defined event contracts so far? And just how far will regulators let them go?
Inside the Crypto.com and Underdog Partnership
The futures prediction markets are powered by Crypto.com Derivatives North America (CDNA), a CFTC-registered exchange. This means the contracts are treated as financial derivatives rather than wagers. A distinction that allows Underdog to offer them in places where sports betting is still outlawed.
Within the Underdog Predict product, users can buy and sell contracts on sporting outcomes in real time. Prices move just like binary options. Rising or falling based on market expectations. And traders can close out positions before the game ends. For everyday sports fans, it feels like betting, but under the hood, it’s structured as regulated event trading.
Which States Can Access the Markets
Underdog is rolling out Predict in 16 U.S. states, covering a mix of jurisdictions where traditional sports betting is either restricted or prohibited. According to Front Office Sports, those states include:
- Alabama
- Alaska
- Arkansas
- California
- Georgia
- Minnesota
- Nebraska
- New Mexico
- North Dakota
- Oklahoma
- Rhode Island
- South Carolina
- South Dakota
- Texas
- Utah
- Wisconsin
Seven of those states already permit some form of crypto sports betting. The other nine do not, making this partnership a potential workaround in major markets like California and Texas, where traditional operators are locked out.
Can They Compete With Kalshi and Polymarket?
Kalshi’s Early Lead in Sports Contracts
Kalshi has been the poster child for federally regulated prediction markets since its 2020 launch. It has approval from the CFTC and has pushed aggressively into sports contracts, gaining trading volume and becoming a key reference point for regulators. In fact, Kalshi has overtaken Polymarket in U.S. volumes several times this year, showing strong momentum.
Polymarket’s Global Appeal vs U.S. Barriers
Polymarket built its reputation on political and entertainment markets but has long been hamstrung in the U.S. due to regulatory bans. That changed in September 2025, when Polymarket acquired QCEX, a CFTC-licensed entity, allowing it to re-enter the American market legally.
This sets the stage for a three-way battle: Kalshi, Polymarket, and now Underdog/Crypto.com with Underdog’s edge being its existing user base of millions of fantasy sports players and bettors.
Regulation — The Big Unknown
Federal Oversight vs State Gambling Laws
The biggest challenge facing prediction markets is the regulatory grey zone. While platforms like Kalshi and Crypto.com’s CDNA operate under federal CFTC oversight, state gambling commissions argue that sports outcomes fall under their jurisdiction.
This conflict has already led to high-profile clashes:
- Ohio regulators warned sportsbooks against partnering with prediction markets, claiming it could endanger their licenses.
- Massachusetts Attorney General Andrea Campbell has sued Kalshi, alleging its event contracts amount to unlicensed sports wagering.
- New Jersey and other states have issued cease-and-desist orders against similar products.
For Underdog, which is licensed as a fantasy and sportsbook operator in some states, this could become a flashpoint. If regulators decide event contracts are “sports betting in disguise,” the partnership could run into serious roadblocks.
Legal Battles Already Underway
Kalshi is already tied up in lawsuits, defending its right to offer event contracts as federally regulated derivatives. That outcome will likely set a precedent for Underdog and Crypto.com.
Meanwhile, Polymarket’s re-entry via QCEX has further muddied the waters — giving regulators another test case of whether prediction markets should fall under Wall Street rules or state gambling law.
Why This Move Matters for Sports Bettors
Same-Game Parlay Options in Restricted States
One of the most intriguing aspects of the partnership is its potential to unlock new betting experiences in states where sportsbooks can’t operate. In places like California and Texas, Underdog plans to blend fantasy props with event contracts to create same-game parlay-style products.
This could be a game-changer, giving millions of sports fans access to speculative markets that look and feel like betting. Without technically being regulated as gambling.
Liquidity, User Trust, and Market Growth
The success of prediction markets depends on liquidity. Without enough traders, spreads widen and prices lose meaning. Crypto.com’s involvement should help bootstrap liquidity, but Underdog will need to convert fantasy players into active traders for the markets to thrive.
Trust is another hurdle. Bettors understand spreads and totals, but fewer grasp the mechanics of trading event contracts. If Underdog can make the experience seamless — as easy as building a parlay — adoption could accelerate quickly.
What Comes Next for Event Contracts
Expansion Beyond Sports Into Politics and Entertainment
Underdog is starting with sports, but the model could expand into politics, entertainment, and macroeconomic events, just as Kalshi and Polymarket have done. A single interface offering NFL outcomes, presidential elections, and Academy Awards predictions could give Underdog a unique edge.
Will DraftKings and FanDuel Follow Suit?
The partnership has caught the attention of industry giants. FanDuel has already announced a collaboration with CME Group to explore prediction markets, while DraftKings CEO Jason Robins has hinted at a similar move. If these market leaders jump in, Underdog and Crypto.com will face heavyweight competition.
Updated Takeaways
Underdog Predict is live in 16 states, with major restricted markets like California and Texas in play.
- Crypto.com Derivatives North America powers the contracts under federal CFTC regulation.
- Polymarket has just regained a U.S. foothold via QCEX, intensifying the competition.
- Kalshi remains the most established player but faces ongoing legal challenges.
- Regulation is the biggest wild card, with lawsuits and state pushbacks already mounting.
Underdog has strengthened its leadership team with new C-suite hires to help scale the product.
Final Thoughts
The Crypto.com–Underdog partnership is more than just another sportsbook tie-up. It represents a strategic gamble that prediction markets can go mainstream, bridging the gap between speculative trading and traditional sports betting.
If successful, Underdog could leapfrog Kalshi and Polymarket by embedding event contracts into an app millions already use. But if regulators crack down or liquidity falls short, the experiment could stall.
Either way, one thing is clear: the line between sports betting, fantasy contests, and financial speculation is blurring fast. And with Crypto.com’s backing, Underdog is betting that fans are ready to trade more than just fantasy points. They’re ready to trade the game itself.
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