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FanDuel’s prediction market partnership with CME Group is showing signs of strain, particularly around sports-related event contracts.
Sportico reported that CME CEO Terry Duffy sharply criticized sports prediction markets on an earnings call even as CME continues to facilitate some sports wagering activity through the joint venture launched with FanDuel in December. Duffy said many sports prediction market products are “gambling” and warned the issue could eventually reach the Supreme Court.
That stance stands out because CME had previously positioned the FanDuel partnership as a way to let users express views on sports and other topics. The Commodity Futures Trading Commission also certified three CME-proposed sports contract types: tennis tournaments, golf tournaments, and college football games.
CME, however, has signaled caution. In a statement cited by Sportico, the company said it wants to be careful about sports event contracts while emphasizing that its broader interest in the FanDuel deal is access to FanDuel’s large user base. CME said the partnership gives it a chance to put its financial markets in front of FanDuel’s 12 million registered U.S. users.
The business tension appears to extend beyond public messaging. According to the report, more than 99% of the notional volume on CME’s prediction market exchange came from sports betting on Tuesday, underscoring how central sports contracts have become to the product. SEC filings also show CME contributed $10.2 million upfront for a 51% stake in FanDuel Prediction Markets Holdings LLC.
At the same time, FanDuel has reportedly started brokering bets through Crypto.com-owned Nadex in addition to CME’s exchange. Sportico also reported that FanDuel applied with the National Futures Association to broker prediction market trades without CME’s involvement.
That matters because CME said there are contractual restrictions on operating alternative venues during the partnership. Earlier this year, CME president Lynne Fitzpatrick said FanDuel’s application did not signal a change in the relationship, stressing that an application is different from a launch.
For players, the immediate takeaway is that FanDuel’s prediction market plans may still be evolving behind the scenes. What to watch next is whether the companies narrow the role of sports contracts, expand to multiple venues, or face deeper regulatory scrutiny over whether these products are treated more like event contracts or gambling. As always, if you use any wagering platform, gamble responsibly.
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Source: As reported by sportico.com.
