Fanatics Launches Prediction Markets Before DraftKings & FanDuel

While DraftKings and FanDuel are still working on their imminent prediction markets, Fanatics Sportsbook has beaten them to the punch, rolling out Fanatics Market on December 3. Rolling out its new prediction market in 24 states, Fanatics has broken ground and become the first major US sportsbook to formally launch a prediction market. The product, Fanatics Markets, has trade event contracts relating to sports, finance, politics and culture, and it is offered through Crypto.com.

If you were wondering how they outpaced DraftKings and FanDuel, that last sentence gives it all away. For the Fanatics Markets is not a bespoke solution, it is an offshoot of Crypto.com’s prediction markets, operating under the DCM (Designated Market Contract) license held by Crypto.com. Fanatics is not the only one either. Underdog Fantasy unveiled Prediction Picks in September this year, through the same exchange (Crypto.com), and it opens up important points of discussion about how these sportsbook-run prediction markets actually work. Are they branded skins for the same exchange, simply offshoots for sportsbook members, or are they unique in their own right?

After all, if you are on the hunt for a good prediction market, then knowing the difference between a DCM-licensed independent brand like Polymarket or Kalshi, and a partnered exchange via Fanatics or Underdog makes all the difference.

Fanatics Launches Prediction Markets via Crypto.com

Fanatics Markets went live on December 3, in 24 states and brings a highly awaited new edge to the sports betting industry. While prediction markets themselves are nothing new, having a prediction market model with a sportsbook brand front end is, creating a unique crossover product for US bettors. This is precisely what DraftKings and FanDuel were after, only they are going about it by creating a standalone product, and not affiliated to any existing prediction markets. Fanatics hasn’t, and that’s why it got a shoe in way before the other two juggernaut brands even gave us a release date for their pending projects.

Crypto.com provides the infrastructure, liquidity, types of markets, and settlements, while Fanatics will bring the branding and customers, who can simply make the jump from sportsbook to prediction markets under the Fanatics brand. Underdog Fantasy made its own prediction markets via Crypto.com back in September, but it is primarily a DFS social sportsbook hybrid.

Fanatics is a conventional, real money sportsbook, licensed in 23 states (including Missouri, which just launched legal sports betting). Now, with Fanatics Markets, it will also have a foot in California, Florida, Texas, and several other major markets where sports betting hasn’t been legalized (or is only available at tribal/retail facilities).

Crypto.com Prediction Exchange Services

Fanatics Markets will provide binary Yes/No prediction markets on finance, culture, politics and sports. It will be a rebranded version of Crypto.com’s offering, which has quite a few distinguishing perks and features. For instance, Crypto.com doesn’t just have $1 contracts, but also supplies prediction markets with $10 and even $100 contracts. It has lower trading fees than Kalshi (this is one of Kalshi’s only drawbacks), and Crypto.com has advanced features for hedged bettors such as stop limits for buying/selling contracts.

However, Crypto.com doesn’t often get mentioned in the same breath as Kalshi and Polymarket. Kalshi is popular for its massive sports coverage, going as far as to offer parlay-style contract building and even goes into alt point spreads and betting props. Polymarket, which came back to the US just recently after a ban by the CFTC, is widely used across the US. It prides itself on being the world’s biggest prediction exchange. And it has the stats to back it up – its record for market volume was a contract market on the 2024 US Presidential Election. That single event yielded over £4 billion in trades.

But Crypto.com has a far smaller scope, both in sports and otherwise, on other real world events. So Fanatics users are not going to get the same vast trading possibilities as they would at Kalshi or Polymarket. They will get the offering at Crypto.com, only with a Fanatics-run front end.

How Prediction Markets are Regulated in the US

DraftKings and FanDuel will both launch in-house, standalone prediction markets that won’t be affiliated to any existing exchanges. FanDuel partnered with CME Group, and is currently working on building its unique FanDuel Predicts app. On the other hand, DraftKings acquired Railbird, a DCM-licensed platform, and will also work on building a fresh, unique offering.

These are effectively companies that are merging/acquiring registered exchange platforms and then working on their own product. In classic sportsbook terms, that is like obtaining a sports betting license to open shop in a new jurisdiction. However, what Fanatics (and Underdog) have done is more like partnering with a local company, and gaining permission to relaunch their product but under the sportsbook’s brand. Similarly, Robinhood’s US prediction market is run by Kalshi, the company doesn’t have the necessary permissions to run a standalone prediction market in the US. Both standalones and partnered exchanges have their pros and cons – from a player’s point of view and for the operators running them.

Standalone vs Partnered Exchanges

Neither consumers nor providers can really ignore the impact of prediction markets in the US. They have been on a meteoric rise, and as the demand continues to grow, the supply chain will also bring more options and competitors to the table. Understanding the differences between how they are run can help you get an idea of what standalone and partnered/offshoot prediction markets have to offer. Simply put, here are some pros and cons for both:

Standalone Exchange Pros

• Full control over markets & features: Operators can build unique markets (parlays, alt lines, custom props) without relying on a third-party exchange
• Greater scalability & long-term independence: No dependency on an external exchange’s liquidity, rules, or compliance structure
• More credibility with regulators: Fully regulated and licensed, in-house infrastructure aligns more clearly with CFTC expectations

Standalone Cons

• Longer development timelines: Requires building exchange technology, risk engines, market surveillance, and settlement systems from scratch
• Higher operational & compliance costs: Running a DCM-style exchange is far more expensive than skinning an existing one
• Slower rollout across states: Each state may need new approvals since it’s a proprietary product, delaying nationwide expansion

Whereas the partnered exchanges have the benefit of quick setups and greater market liquidity, but they have much less flexibility.

Partnered Pros

• Much faster launch timelines: Can go live in dozens of states instantly using a partner’s existing DCM license and infrastructure
• Lower upfront costs: No need to build exchange tech, liquidity pools, or settlement engines
• Immediate large scale liquidity: Taps directly into Crypto.com’s user base and order book, reducing thin-market problems

Partnered Cons

• Limited market variety: Product is restricted to whatever markets Crypto.com chooses to list (fewer event types than Polymarket/Kalshi)
• Less product differentiation: Fanatics and Underdog essentially share the same backend, making the markets feel identical across brands
• Reliance on a partner exchange: Vulnerable to Crypto.com’s regulatory risk, outages, and strategic decisions

There are only so many DCM licensed platforms in the US, so the pickings are limited for sportsbooks that want to either buy or partner with an exchange.

Legal Issues Surrounding Sports Markets

Operators and players have not been the only ones watching the rise of prediction markets. Lawmakers have monitored the situation extensively, specifically the sports related markets. These have come under scrutiny by the CFTC on numerous occasions, as they really fall somewhere between classic prediction markets and sports betting. One would be the natural territory of the federal government, whereas sports betting is regulated – or completely illegal – at a state level.

Kalshi has famously been taken to the courts in protracted battles over whether their sports and election markets should be considered financial instruments. The CFTC is constantly reviewing single event contracts to see if there are any breaches of its laws, but there is a massive blurred line where sports betting falls into. For the likes of DraftKings, FanDuel, and any other operator who wants to create a standalone exchange, getting the necessary permissions and filtering the options to fall well within the legal stretch of the law is vital.

Fanatics won’t have that problem, as they can essentially piggy back the Crypto.com DCM license, and simply offer whatever Crypto.com is offering. That’s why Fanatics could get such a quick launch, and why DraftKings and FanDuel are taking so long to unveil their products.

A Momentous Shift or a Passing Fad

The early entry of Fanatics Market will give them a head start over FanDuel and DraftKings, but it doesn’t necessarily mean that they will lose out much of the market when they do eventually go live. While prediction markets have been around for years now, it is only really since the 2024 Super Bowl and the 2024 US Presidential Elections that they have rocketed in popularity. The expansion into single game sports predictions really became a thing after those two events. So it is very fresh territory, and this can work to Flutter (FanDuel’s parent company) and DraftKings’ favor.

Because they are working on standalone projects, they can watch what works, and what is just a fringe experiment that will fail to hit the ground running. If they analyze the markets closely, they will be able to capitalize on the demands and needs of the public. Of course, there are arguments to be had about prediction markets already climaxing, and that they are past their peak. Regulatory pressures, and with legal sports betting still spreading across the US, the demand for prediction markets may be put to the test in 2026.