CME Group and FanDuel are teaming up to unveil a new prediction market called FanDuel Predicts, which is scheduled to debut this December. This innovative platform will be limited to states where legal sports betting has not yet been established, allowing users to place bets on a variety of events including sports outcomes, gas prices, and cryptocurrency trends.
The concept of prediction markets involves users betting on the likelihood of specific real-world occurrences, such as a quarterback”s average yards in a game or the statements of a company during an earnings call. This strategic launch reflects the growing competition in the prediction market space, particularly following recent successes by platforms like Polymarket and Kalshi during the lead-up to the 2024 U.S. presidential election.
According to Peter Jackson, CEO of Flutter, the parent company of FanDuel, the new offering represents a significant growth opportunity, specifically in regions lacking existing FanDuel sportsbook operations. He emphasized that the potential for this product lies in states where the current influence of prediction markets is minimal.
Under the terms of the partnership, CME Group, recognized as the largest derivatives exchange globally, will receive fifty percent of the gross revenue generated by FanDuel Predicts. This collaboration comes as the popularity of prediction markets surges, with recent data from Dune Analytics indicating that weekly notional volumes for these markets experienced a rise from approximately $2 billion in November to around $3 billion the following week, primarily driven by various sports events.
However, the expansion of prediction markets has not gone without scrutiny from regulatory bodies. There have been ongoing disputes between companies and local gaming authorities regarding the regulation of these markets. While many prediction market platforms operate under the supervision of the Commodity Futures Trading Commission (CFTC), state gaming commissions have raised questions about the extent of the federal agency”s authority over these entities. A notable incident occurred on October 24, when the New York Gaming Commission issued a cease-and-desist order to Kalshi for conducting operations without a state license.
The introduction of FanDuel Predicts by CME Group and FanDuel aims to broaden the accessibility of prediction markets across the United States, providing users with new avenues for wagering while regulators navigate the complexities of innovation and compliance.
