Underdog Sports expands into regulated prediction markets with new Prediction Picks feature

Underdog Sports, the New York-based daily fantasy sports platform founded in 2020, has introduced a new product called Prediction Picks. This addition allows users to trade event contracts on sports outcomes, marking a strategic expansion beyond its traditional pick 'em and best ball fantasy contests. The move reflects a broader industry trend as established fantasy sports operators seek to integrate with the growing prediction markets sector.

The new feature operates through regulated exchanges, including UDX, Kalshi, and Crypto.com, which act as designated contract markets. Underdog has secured a licence from the Commodity Futures Trading Commission to facilitate these trades, positioning the platform to compete with larger, dedicated prediction market providers. Users can trade on various outcomes, including team winners, margin of victory, and futures, with each contract paying out $1 for a correct prediction.

To incentivise adoption, Underdog has partnered with CBS Sports to offer eligible new users a 50 per cent deposit match up to $1,000 in bonus funds. The promotion, accessible via the promo code CBS, also includes free entry into the "Keep Your Million" survival game, a contest involving a virtual pot of $1,000,000 in bonus funds. However, the terms of service dictate that bonus entries are non-withdrawable and require a one-time playthrough before winnings can be accessed.

The availability of Prediction Picks is currently limited to select US states, with specific exclusions for jurisdictions such as Arizona, Colorado, and New Jersey. Users must be physically located in a state where Underdog operates and meet age requirements, which vary by region. The platform charges a nominal exchange fee of $0.02 per contract but does not levy fees for deposits or withdrawals, which are typically processed within 24 to 72 hours.

From a governance perspective, the integration of financial instruments into a sports app raises questions about user experience and regulatory clarity. The Underdog app lobby currently highlights 25 different "featured" events, a volume that some observers suggest may overwhelm casual users. Furthermore, the platform restricts the ability to combine multiple prediction picks in a single trade, limiting the flexibility available to more sophisticated traders.

As Underdog continues to evolve from a niche fantasy sports operator to a broader sports gaming platform, the success of Prediction Picks will likely depend on its ability to navigate the complex regulatory environment of US states. The partnership with CBS Sports provides immediate visibility, but the long-term viability of the product will hinge on user retention and the seamless integration of trading mechanics within the existing app infrastructure.