Breaking: In an overnight development that will surprise few, U.S. market leader FanDuel announced–subject to Commodity Futures Trading Commission (CFTC) approval–its entry into the prediction markets space.
Not one to be left behind, FanDuel–owned by Flutter Entertainment–currently dominates the U.S. iGaming and sports book market with more than a 40 per cent share of sports betting action. It has now unveiled what it calls a “groundbreaking alliance” with CME Group.
CME Group is one of the world’s leading and most diverse derivatives marketplaces, best known for operating global financial derivatives exchanges, including the Chicago Mercantile Exchange.
The deal, which is subject to regulatory approval, will see the two organisations collaborate to deliver event-based contracts, with products expected to go live before the end of the year.
While no mention has yet been made of sports betting, the motivation behind this deal is clear: secure a strong foothold in a rapidly expanding new market before the first-mover advantage disappears. Steering clear of sports betting at this stage may also help FanDuel and CME achieve faster approval from the CFTC.
What We Know So Far
According to the joint press release: “This innovative partnership will build on CME Group’s long track record of developing regulated, transparent markets and FanDuel’s vast customer reach.
“Together, the companies will develop new fully funded, event-based contracts with defined risk. Customers will be able to express their views multiple times a day on a wide range of markets with simple ‘yes’ or ‘no’ positions for as little as $1.
The companies have confirmed that products will include benchmarks such as the S&P 500 and Nasdaq-100, commodity prices such as oil, gas and gold, cryptocurrencies, and key economic indicators, including GDP and CPI, with further offerings expected to be announced in the coming months.
FanDuel CEO, Amy Howe, said: “Partnering with CME Group will unlock our ability to bring even more new and engaging products to FanDuel’s fast-growing customer base.”
“We believe there is potentially a wide audience for trading event-based markets and we want to provide a platform that allows our customers to engage in this activity.
“We are excited to be partnering with CME Group to design new and engaging products, combining innovation with best-in-class regulatory compliance and consumer protections.”
Scoring An Advantage
The growth of prediction markets in the sports betting space has already sparked controversy among both state regulators and Tribal operators. However, prediction markets are advantageous as they are federally regulated. This allows them–unlike traditional betting brands–to bypass state-level regulatory requirements and taxes, which in jurisdictions like New York can cost operators as much as 51 percent of gross gambling revenue.
Currently, the CFTC does not formally approve betting and gambling products–in fact, it specifically prohibits them–but since the start of Trump’s second presidency, platforms like Kalshi and Robinhood have expanded into the sector with minimal backlash from federal forces.
More to follow.
