Underdog Shuttering North Carolina Sportsbook in Favor of Prediction Market

Underdog Sports is eschewing mobile sports betting and instead pivoting to offer its prediction market platform in all 50 states. North Carolina is the final nail in Underdog’s sports betting coffin, as it will terminate its license this coming Wednesday.

Underdog Predicting Contracts Over Bets

Underdog began as a daily fantasy sports operator but decided to expand its reach to the sports betting market when it successfully applied and was granted a license in North Carolina in March 2024. But with the success of prediction markets that have been offering sports-event contracts since before last season’s Super Bowl, those plans for sports betting expansion have changed dramatically.

Underdog voluntarily withdrew its license prior to the launch in Missouri on December 1st, and it was only a matter of time before it did the same in North Carolina. Underdog has now closed the door on what was once an ambitious strategy to enter the mobile sports betting market in as many states as possible through a collaboration with Crypto.com.

Below are Underdog’s wind-down procedures in North Carolina.

• Underdog will stop accepting sports wagers on Tuesday, Dec. 16.
• Underdog expects to settle all outstanding sports wagers by Thursday, Dec. 18.
• A sports wagering account holder can withdraw funds from their account throughout and after the closure.
• Underdog is converting all unused sports wagering funds to withdrawable funds on individual accounts.

The Great Debate

The state gaming regulators have uniformly objected to the sports event prediction platforms, as they are taking a bite out of the sports betting revenues generated by the online sportsbooks that pay taxes to the state, while the prediction market platforms do not.

Kalshi, Polymarket, and Crypto.com are some of the more popular derivative trading platforms that historically have been engaged in speculative contract trading for gold, silver, and other commodities.

However, that began to change in November 2024 when they began offering contracts on the presidential election in which a vast percentage of the contracts were on a Trump victory, in stark contrast to the mainstream polls that showed Kamala Harris securing a landslide decision. From there, prediction platforms branched out into the sports betting realm by offering contracts on sporting events, with the first being the Super Bowl in February 2025.

The mobile sportsbooks that pay taxes to the state and the state gaming authorities were both irate that companies they referred to as interlopers could operate in any state without a license or an obligation to pay taxes, due to them being governed by the Commodity Futures Trading Commission (CFTC), a federal agency that licenses the trading platforms and whose authority supersedes the state agencies.

Ongoing Legal Battle and Supreme Court Outlook

This has triggered a legal battle that has largely ruled in favor of the trading platforms, allowing them to continue operating in all 50 states. However, this is far from settled law, as there are still higher courts that will ultimately hear arguments from both sides. Many believe it will ultimately land in front of the US Supreme Court within the next few years.

Until then, some sportsbooks have joined the prediction markets instead of fighting them and gaining access to markets like California and Texas that have yet to legalize sports betting but can do nothing about sports betting contracts being offered by CFTC-governed prediction platforms.