Underdog Launches NFL Drive Prediction Markets Amid Regulatory Scrutiny

Underdog has introduced drive-by-drive prediction markets for NFL games, a move that coincides with increasing regulatory examination of micro-betting and calls for bans on certain live wagering products. This launch occurs as state lawmakers and federal officials voice concerns over consumer protections and potential manipulation.

What Happened

Underdog recently initiated offerings of drive-by-drive prediction markets for NFL games, a product described by its director of product, Harry Raymond, as potentially the first of its kind, according to Legal Sports Report. Raymond shared screen recordings of these new markets during a Monday Night Football game. These contracts mirror micro bets available at regulated sportsbooks, covering outcomes such as the next drive’s result or who will catch a pass during that drive.

The introduction of these markets follows weeks after the Commodity Futures Trading Commission (CFTC) paused micro contracts from Novig due to manipulation concerns. Simultaneously, several states are considering legislation to ban live betting at sportsbooks. Legal Sports Report contacted the CFTC regarding its view on Underdog’s new markets and whether they would request their suspension or removal, but did not receive an immediate response.

Key Details

• Underdog’s new product offers live, drive-by-drive NFL prediction markets, according to Harry Raymond, director of product.
• The launch occurs amid a CFTC pause on Novig’s micro contracts due to manipulation concerns and legislative efforts in multiple states to ban live betting.
• Congressman Ro Khanna (D-CA) publicly criticized sports prediction markets, arguing they circumvent state gambling laws, reduce state tax revenue, and lack consumer safeguards, calling for a federal ban.
• Prediction markets generally permit users as young as 18, contrasting with most state-regulated sportsbooks that require users to be 21, and do not face the same mandatory responsible gambling tool requirements as regulated sportsbooks.

Why It Matters

The expansion of prediction markets into granular, live sporting events by operators like Underdog highlights an evolving segment of the wagering landscape. This development is set against a backdrop of heightened regulatory scrutiny of micro bets and live wagering. Lawmakers in New Jersey, Pennsylvania, New York, and Ohio have introduced or advanced bills seeking to restrict or ban micro bets and certain forms of live betting, citing problem gambling concerns, according to Legal Sports Report. The CFTC’s recent actions against Novig’s micro contracts further underscore regulatory concerns regarding market manipulation.

Furthermore, prediction markets currently operate under different regulatory frameworks than state-regulated sportsbooks. They are not subject to the same age restrictions, often allowing users as young as 18 compared to 21 for sports betting in most states, nor are they required to offer the same responsible gambling tools. Congressman Ro Khanna’s call for a federal ban, supported by other lawmakers, indicates growing bipartisan concern in Congress over these markets’ regulatory oversight, potential public health risks, and impact on state tax revenue, as reported by Legal Sports Report.

What’s Next

A Democratic-controlled Congress could initiate hearings, investigations, and apply pressure on the CFTC regarding prediction markets, potentially leading to new legislation, according to sports and gaming attorney Daniel Wallach. However, gambling law expert I. Nelson Rose reportedly anticipates that President Donald Trump would veto such legislation, citing Donald Trump Jr.’s investments in Kalshi and Polymarket. Bills targeting the industry have already been filed, including the Prediction Markets Are Gambling Act introduced by Sen. John Curtis (R-Utah) and co-sponsored by Sen. Adam Schiff (D-Calif.), which aims to prohibit operators from offering sports event contracts.