• The companies announced a joint venture in August.
• FanDuel Predicts app will launch in December.
• App will feature sports event contracts in states where sports wagering isn’t permitted.

CME Group (NASDAQ: CME) and FanDuel said today their previously announced prediction markets partnership is taking shape and will arrive next month in the form of FanDuel Predicts.

The CME Group logo. The exchange operator and partner FanDuel will roll out a prediction markets platform, including sports, in December. (Image: CME Group)

FanDuel Predicts will function as a standalone mobile application, not as part of the standard FanDuel sports betting platform. The big news in the announcement is that the new app will offer sports event contracts in states where sports wagering currently isn’t permitted. That offering will be restricted to clients that are not on tribal lands.

As new states legalize online sports betting, FanDuel will cease offering sports event contracts in those states,” according to a statement issued by the companies.

That implies with online sports betting going live in Missouri in December, that state will be off the list of locations where FanDuel Predicts will make sports derivatives available.

FanDuel Predicts Could Be Effective Way to Enter Big States

With Missouri joining the party next month, online or retail sports betting is now permitted in 40 states and Washington, DC, but absent from that list are the big fish of California and Texas. Likewise, the sports wagering market in Florida, the third-largest state, is a monopoly controlled by the Seminole Tribe.

While FanDuel Predicts could be that company’s ticket into the “big three” states and Georgia, it could invite legal challenges, particularly in California and Florida where tribal nations control gaming expansion. However, Kalshi recently notched a legal win in California when a Northern California District Court judge ruled against three tribes that sued the prediction markets giant on the grounds its claim that sports betting is legal in all 50 states breeches the Lanham Act.

Tribal casino operators aren’t as prominent in Texas, but that state has its own anti-gaming stances that could be hostile to prediction markets. However, the second-largest state has thus far stayed out of legal rifts with event contract firms.

FanDuel Predicts Not Just Sports

Central to the CME/FanDuel relationship is the exchange operator’s expertise in financial derivatives, which sets up FanDuel Predicts to offer much more than sports event contracts — a point that was highlighted in August and reiterated today.

“In addition to sports, event contracts will be offered on benchmarks such as the S&P 500 and Nasdaq-100, prices of oil and gas, gold, cryptocurrencies, and key economic indicators such as GDP and Consumer Price Index (CPI),” according to the press release.

For now, the bulk of volume on the leading prediction markets is attributable to sports and politics, but many younger bettors and prediction market users are also investors, implying it’s possible crypto- and index-linked derivatives could gain traction.

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