The analysts said both companies had taken the “cleanest” way possible to avoid friction with states as they prepare to launch their own prediction market platforms in the near term.
A source indicated to Citizens that both platforms were set to launch last Friday (12 December), but third-party dependencies delayed the launch.
Arizona’s action against Underdog marked the first time a US state has stripped a fantasy licence over prediction market ties.
The state sent a letter to Underdog on 5 December notifying it of the decision, which became public last week. Arizona cited Underdog’s relationship with Crypto.com, the exchange it uses to run its prediction market platform, as the reason for the licence removal.
Other operators face uncertainty
The Citizens analysts said the situation could have broader implications beyond Arizona, noting that Underdog must now disclose the rationale for its licence removal to other states where it operates.
The analysts said Arizona stripped the licence despite Underdog and Crypto.com not having a live prediction market platform in the state, potentially setting a precedent for other sports betting states.
As Citizens examined the value chain for DraftKings and FanDuel, the analysts found neither company has exposure to entities deemed illegal by Arizona.
CME Group does not provide sports contracts in states with legal sports betting. The analysts said they would argue that DraftKings’ acquisition of Railbird solves potential issues by providing flexibility to tailor its offering around regulatory changes.
Other operators may face greater risk. Citizens said it believes Fanatics, which has a high single-digit handle market share in Arizona, and PrizePicks could be impacted.
Fanatics launched Fanatics Markets two weeks ago with Crypto.com, while PrizePicks has relationships with Kalshi and Polymarket, which also received a cease-and-desist letter from Arizona.
The analysts noted that the picking and choosing from the state creates uncertainty with the inconsistency in Arizona’s approach.
Arizona awarded bet365 a gaming licence during a time when it had black market exposure in China, Citizens noted, but is now stripping a licence for an offering not currently being operated in the state.
Dingnews.com 18/12/2025