Underdog is seeing a significant increase in activity as prediction markets allow it to offer more sports betting products across the country.
Customer handle is climbing rapidly as Underdog expands its prediction markets offering, founder and CEO Jeremy Levine said Wednesday at Bank of America’s Gaming & Lodging Conference.
“When we could only offer a sliver of the product, our customer handle was, doing the math in my head right now, well, a fourth what sportsbook’s customer handle is,” Levine said. “And prediction markets I think have even been higher because you get the trading dynamic and we’re seeing the climb happen rapidly in real time. So that’s super exciting.”
Underdog goes all in on prediction markets
Underdog entered prediction markets last September through a partnership with Crypto.com before acquiring licenses for its own exchange and clearinghouse. The company now operates a vertically integrated prediction market business through Underdog Exchange, or UDX.
More than 50% of handle on the exchange currently comes from parlays, according to Levine.
Prediction markets have become an increasingly important piece of Underdog’s business. IG Group agreed in July to acquire the company for up to approximately $1.3 billion. That deal remains subject to regulatory approval.
Prediction markets open up the map
Levine pointed out prediction markets allow Underdog to offer products its fantasy sports business could not, particularly in states without legal online sports betting such as California and Texas.
“We used to think we could offer about a third of the experience sports fans want in total, and we were able to do it in two-thirds of the states,” Levine said. “Now we can offer really 100% of the experience in nearly 100% of the states, and hopefully with Supreme Court clarity, we get to 100% of the states.”
That opportunity is already affecting how Underdog allocates its business. The company surrendered fantasy sports licenses in Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Ohio and Pennsylvania this week after regulators made clear they did not want Underdog offering prediction markets while holding state fantasy licenses.
“Sometimes, as the leader of a business office, you’ve got to make decisions in dollars and cents, and here that was a very obvious one,” Levine said.
