Arizona’s gambling regulator has delivered a significant blow to Underdog, signaling its intent to revoke the company’s fantasy sports license. The action stems from concerns over Underdog’s connections to prediction markets, a rapidly evolving and increasingly scrutinized form of wagering.
The Arizona Department of Gaming (ADG) has determined that Underdog’s partnership and financial support of Crypto.com actively aids and abets what the ADG considers illegal conduct within the state. This isn’t simply a disagreement over rules; the ADG believes Underdog is providing a deceptive legitimacy to operations they deem unlawful.
This dispute highlights a growing tension between state and federal regulators regarding the legality of prediction markets. The Commodities Futures Trading Commission (CFTC) asserts federal oversight, while states like Arizona are aggressively defending their existing gambling laws and licensing frameworks.
Underdog’s September 2025 partnership with Crypto.com was intended to fuel expansion into states without established sports wagering, leveraging Underdog’s existing licenses – including the one now at risk in Arizona. The ADG views this relationship as a direct threat to the public interest.
The regulator’s statement is unequivocal: Underdog’s association with Crypto.com “poses a threat to the public interest.” The department has formally notified Underdog of its intent to revoke license FS200008, initiating a process that Underdog can appeal.
In response to mounting pressure and regulatory crackdowns, prediction market companies are uniting. A newly formed coalition, “The Coalition for Prediction Markets,” aims to establish a unified industry voice and advocate for the continued growth of these platforms.
Matt David, a key figure in the coalition and a leader at Crypto.com, emphasized the importance of this collective effort. He stated that the U.S. represents the largest potential market for prediction markets, making a unified front essential for navigating the complex legal landscape.
This coalition represents the first coordinated attempt to protect access, bolster integrity, and demonstrate the public benefit of prediction markets. It’s a clear signal that the industry is preparing for a prolonged battle over its future.
The timing of this coalition’s formation is critical. As the CFTC’s reach expands, and states like Arizona push back, prediction market providers are facing increasing scrutiny and legal challenges. This unified effort could be a defensive maneuver to safeguard their operations.
The situation in Arizona is a microcosm of a national debate. The clash between traditional gambling regulations and the innovative, yet controversial, world of prediction markets is only intensifying, promising a period of significant legal and regulatory upheaval.
