Last week, the gambling industry witnessed a significant shift: the star operator Underdog officially announced that it will shut down its sports betting business in North Carolina on December 16, focusing all its efforts on the prediction markets. This is not an isolated event, but a reflection of the undercurrents within the entire industry. Following this, Kalshi, Crypto.com, Coinbase, and other tech and trading giants have joined forces to establish the US Prediction Markets Alliance (CPM), officially banding together to vie for industry influence. The timing of this move is quite subtle.
A Star Player's Strategic Shift: From Exit to Entry
Underdog's decision surprised many. Despite the hot market in North Carolina, they decisively shut down the state's only sports betting operation, settling all unresolved bets as wins and transparently managing user funds. The company clearly stated that its future core will be in prediction markets, and it has already applied to join the National Futures Association through a subsidiary. This move is widely interpreted within the industry as "sacrificing pawns to save the chariot," focusing firepower on the next growth pole. Their name also appears on the newly established CPM alliance's founding member list, with clear intentions.
Industry Giants Band Together, Vying for Federal Regulatory Influence
Underdog's transformation is a microcosm of collective action in the prediction market industry. The newly formed CPM alliance brings together key players like Kalshi, Crypto.com, Coinbase, Robinhood, and Underdog. Their core demand is clear: oppose the fragmented state-level regulations and seek unified federal rules.
Currently, regulatory bodies in states like Louisiana and Connecticut view sports event contracts as illegal sports betting and are cracking down on them. However, the alliance firmly argues that their products should fall under the "commodities" category regulated by the US Commodity Futures Trading Commission (CFTC), not under state gambling laws. The alliance's executive director, Matt David, stated bluntly, "Prediction markets are a new type of public infrastructure, and the US is the largest frontier market. We need a national voice, not 50 conflicting interpretations."
Billion-Dollar Market and Regulatory Tug-of-War
The urgency of these giants to band together stems from the fact that the market is indeed large and growing rapidly. According to Kalshi's CEO, the annual trading volume of prediction markets has already exceeded $150 billion, a figure that commands respect from any traditional financial product. After the latest round of funding, Kalshi's valuation doubled to $11 billion.
However, high growth comes with high regulatory pressure. The coexistence of state enforcement actions (such as cease and desist orders and lawsuits) and the ambiguous stance at the federal level (such as the CFTC's non-action position) leaves the entire industry in great uncertainty. The formation of the alliance is an attempt to lobby policymakers collectively, emphasizing the necessity of federal regulation in preventing insider trading and protecting consumers, and trying to tilt the rules in their favor.
Dual Insights for the Gambling and Financial Industries
This series of actions brings new considerations to both the traditional gambling and financial industries. For the gambling industry, prediction markets as a "knowledge-based financialization" product are blurring the boundaries between gambling, finance, and information markets, potentially diverting a portion of cognizant users. For the financial markets, this represents a new, highly participatory derivative category.
The establishment of the alliance and Underdog's transformation mark the prediction market's move from fringe innovation to mainstream competition. The outcome of the upcoming regulatory battle will directly determine how this emerging market, worth hundreds of billions, will integrate into the US economic landscape. For more updates on global gambling regulations and market trends, please follow the continuous coverage on PASA's official website.
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This article is from "PASA-Global iGaming Leaders," a gambling industry news channel:https://t.me/pasa_news
Original in-depth gambling channel:https://t.me/gamblingdeep
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PASA official website: https://www.pasa.news
