Analyst Examines Underdog’s Arizona License Loss, Says DraftKings & FanDuel Are Safe

An analyst for Citizens has examined the recent revocation of Underdog’s fantasy sports license in Arizona and weighed in on a pressing industry question – Could other operators also be in danger?

Underdog Lost Its License Due to Prediction Markets Deal

For context, Underdog was recently deprived of its fantasy license in Arizona due to its recent tie-up with Crypto.com and interest in the prediction markets sector. This came amid a broader regulatory pushback against event contracts, which many regulators have slammed as unlicensed sports betting.

Despite the opposition, the sector’s rapid growth has led to increased operator interest. Even the US’s top sportsbooks, DraftKings and FanDuel, have expressed curiosity in the novel sector and desire to launch their own prediction products.

Underdog had a similar idea, but its partnership with Crypto.com seems to have irked the Arizona regulator, leading to the revocation of the license. This decision was taken even though neither Underdog nor Crypto.com offered prediction markets in Arizona.

This drastic decision sparked fears that other license revocations are to follow and that even some of the two top betting companies are at risk. However, Citizens doesn’t believe that the latter will be the case.

DraftKings and FanDuel Are Safe, Smaller Companies Might Not Be

A Citizens analyst said that DraftKings and FanDuel’s plans to foray into the prediction markets sector have been very carefully crafted to create minimal regulatory problems. According to the analysis, neither company had violated rules that could lead to a loss of license.

However, this isn’t to say that other companies couldn’t lose their licenses. Citizens believes that less diligent operators might still face regulatory wrath. The analyst cited Fanatics and PrizePicks, both of which boast a strong presence in Arizona, could experience trouble. Fanatics, in particular, launched its own prediction markets product in partnership with Crypto.com, which is the same company Underdog had teamed up with.

PrizePicks, on the other hand, sports partnerships with Polymarket and Kalshi, both of which have been asked to cease and desist by Arizona authorities.

In any case, the analyst noted that Arizona’s approach has not always been consistent. Unlike Underdog, which was immediately punished for its partnership with Crypto.com, for example, the regulator previously issued a license to bet365, despite its unlicensed operation in China, which was still live at the time.  

In other news, Underdog just ended its sportsbook operation in North Carolina.