FanDuel Throws Hat Into Predictions Market in Partnership with CME

Online betting platform FanDuel is partnering with the world’s largest derivatives exchange, Chicago Mercantile Exchange (CME), to launch a prediction market.  CME announced the launch today, noting that it will go live in December and make financial markets accessible to millions of Americans.

The CME will provide its technical expertise with derivatives and risk management, while FanDuel will leverage its industry-leading brand.

FanDuel to Launch Standalone Platform FanDuel Predicts

According to the announcement, the predictions market will be on a new standalone mobile application, FanDuel Predicts. The app will launch in December and provide access to sports event contracts in basketball, football, hockey, and baseball.

It said:

“Subject to appropriate regulatory filings, the app will provide access to sports event contracts across baseball, basketball, football, and hockey. In states where online sports betting is not yet legal, customers who are not on tribal lands will be able to trade event contracts on the outcome of sporting events.”

However, the app will also offer event contracts on other topics, including benchmarks such as the Nasdaq 100 and S&P 500. Prices of commodities and key economic indicators are also among the topics that could have event contracts.

The new product is part of FanDuel’s effort to expand its scope while also skirting regulations around sports betting. Peter Flutter, the FanDuel parent company, Flutter Entertainment, explained this in a CNBC interview, stating:

“Prediction markets are, you know, regulated by the CFTC, and in our partnership with CME, we’re going to be able to make these products, the sports products, available in all the states where FanDuel does not have a sports betting license.”

However, the company does not plan to enable the sports predictions product in the regions where FanDuel sports betting is already available to users.

US Predictions Market Competition Heating Up

Meanwhile, the partnership between FanDuel and CME highlights increased interest of traditional gambling companies in the prediction market. This puts them in direct competition with prediction markets startups Polymarket and Kalshi.

The two platforms have dominated the prediction markets volume over the past few months. However, their ascendance has affected gambling companies as they are eating into their market share, especially with sports event contracts.

Interestingly, DraftKings is also preparing to get involved in the prediction market, having acquired the regulated exchange Railbird last month. The company said it will launch DraftKings Prediction as a mobile application.

While the online gambling platforms are venturing into the prediction market, Polymarket is also relaunching its US operations. The decentralized predictions market platform, which exited the US in 2022, has grown to become one of the top two predictions market platforms.

Its major competitor is US-licensed Kalshi, and its relaunch in the US could intensify the competition. While Polymarket grew off bets on the outcome of the 2024 US elections, it has diversified with event contracts outside of political issues.

The company has already secured multiple partnerships this year, including with the National Hockey League (NHL) and fantasy sports app PrizePicks. It also became Yahoo Finance’s exclusive prediction markets partner earlier this week.