FILE PHOTO: CME Group Inc logo is seen displayed in this illustration taken April 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
Dec 22 (Reuters) - Sports betting firm FanDuel and derivatives exchange heavyweight CME Group on Monday announced the launch of their prediction markets platform in five U.S. states, as the red-hot asset class continues to draw in new entrants.
The platform has been launched in Alabama, Alaska, South Carolina, North Dakota and South Dakota, with a phased national rollout to other U.S. states through early 2026.
The launch builds on the tie-up between FanDuel and CME Group unveiled earlier this year to develop a new event-based contracts platform.
Dubbed "FanDuel Predicts," the platform will allow customers to trade event contracts on global benchmarks such as the S&P 500, Nasdaq-100 and prices of oil and gas as well as key economic indicators.
Apart from financial markets, the platform will also offer sports contracts across baseball, basketball, football, and hockey in states where online sports betting is not yet legal.
Prediction markets allow users to bet on the outcomes of real-world events and have surged into the mainstream since the 2024 U.S. presidential race, drawing in traditional financial heavyweights and newer players.
Analysts say CME is looking to establish itself as the preferred exchange for sportsbooks looking to enter the booming prediction markets, as it seeks to tap the retail craze for prediction markets.
"This launch is a pivotal step for expanding the reach of our products to FanDuel's millions of registered users across the U.S.," said Lynne Fitzpatrick, CME's chief financial officer.
CME could garner more than $300 million in revenue from the FanDuel joint venture alone should it reach the size of Kalshi and Robinhood's partnership, according to Piper Sandler analysts.
Last week, sports-betting giant DraftKings also announced the launch of its predictionmarkets platform, with CME as the exchange venue at launch.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shailesh Kuber)
