FanDuel has partnered with CME Group to launch a new prediction market joint venture (JV) later this year in a landmark move from the Flutter Entertainment-owned brand.
The operator described the partnership as a “groundbreaking alliance”, with event contracts to be made available to customers later this year.
Crucially, the partnership with CME Group, which operates derivative exchanges, including the Chicago Mercantile Exchange, has made no mention of sports event contracts at this stage.
Kalshi, Robinhood and Crypto.com have drawn the ire of state gaming regulators and sports betting industry stakeholders for adding sports event contracts to their respective offerings.
Instead, FanDuel will offer markets on benchmarks such as the S&P 500, the Nasdaq-100, oil and gas, gold, cryptocurrencies and other economic indicators.
The business said that “further details of additional offerings [would] be determined in the coming months”.
Customers will be able to take ‘yes’ or ‘no’ positions in the markets from $1, with the event-based contracts made available through FanDuel.
The JV will operate as a non-clearing futures commission merchant (FCM), the operator revealed in an announcement last night, 20 August.
“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,” FanDuel noted.
The event contracts will be listed subject to review from the Commodity Futures Trading Commission (CFTC), which regulates derivative exchanges like Robinhood and Kalshi.
CME is a Nasdaq-listed entity that describes itself a the “world’s leading derivatives marketplace”. The platform allows users to trade futures, options, cash and OTC markets.
The step into prediction markets from FanDuel is the first from a traditional online sports betting operator.
Reports earlier this summer linked DraftKings with a M&A move for CFTC-ratified Railbird Exchange, while a host of US-facing operators’ CEOs said on Q2 earnings calls they’d be keeping a keen eye on developments.
Flutter CEO Peter Jackson had previously told analysts that the group’s experience of running the Betfair Exchange stood it in good stead to launch an event contracts platform.
Prediction markets have exploded in the US since the 2024 presidential election, with the advent of sports event contracts ramping up interest even further.
This week, Kalshi added props, over/unders and points spreads to its offering, while Robinhood also rolled out some NFL and college football markets.
Coinbase has also said it is exploring a route into the space, with the cryptocurrency platform stating it plans to become an “exchange for everything”.
Amy Howe, FanDuel CEO, 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.”
On the development, Jordan Bender, an equity analyst from Citizens, raised the issue of customers being able to use the same wallet for gambling and prediction markets.
He wrote: “The cross-sell between apps and spend associated with the venture will be two key areas to focus on in the coming months as the platform comes to fruition.
“The other piece is around how the funds can be commingled between a gambling wallet and funds used for event-based contracts. We believe the least amount of friction would be a one-stop shop and seamless wallets if it looks to pair its liquidity pool and sports betting.
“The wallet situation has been costly and time-consuming for companies in the space and would prove to be one of the largest hurdles to minimise friction, in our view.”
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US sports betting and igaming market leader to offer a host of financial futures markets but steer clear of sports event contracts, as CEO hails “new and exciting” product
The post FanDuel to expand into prediction markets via JV with CME Group first appeared on EGR Intel.