FanDuel is preparing to enter the prediction-markets space through a deal with derivatives exchange CME Group, but sports doesn’t appear to be on the agenda for now.

The “groundbreaking alliance,” announced Wednesday, is intended to provide FanDuel’s more than 12 million registered users with access to “financial markets.” Under the agreement, the companies will develop event contracts that users can trade “yes” or “no” on for as little as $1. The event contracts are expected to launch later this year, and topics initially available will include the prices of oil and gas, gold, cryptocurrencies, and more. 

Notably absent from the press release was any mention of sports offerings. Dustin Gouker’s Substack, “The Closing Line,” which covers the betting industry, reported that the product “will focus on financial products at launch and will not include sports event contracts.” A representative for FanDuel declined to comment.

The press release did tease “additional offerings” to come. Analysts at J.P. Morgan interpreted that as a nod to upcoming sports event contracts, saying in a research note issued late Wednesday that they believe the omission of sports from the announcement was likely intentional “given ongoing deliberations with industry stakeholders (state legislators, casino partners, tribal partners, and others).”

The analysts also said they “would not be surprised” to see DraftKings follow suit by “tip-toeing into prediction markets.”

In a research note of their own, analysts at Jefferies said the new partnership “provides FanDuel with the regulatory and technical infrastructure to launch any new product quickly,” including sports event contracts.

The FanDuel product will be regulated by the Commodity Futures Trading Commission (CFTC), a federal agency, while its traditional sports betting products are regulated on a state-by-state basis.

“Individual investors are increasingly sophisticated and continually pursuing new financial opportunities,” CME chairman and CEO Terry Duffy said in Wednesday’s statement. 

“Together, our event-based products will appeal to the growing public interest in markets, and we will provide education to attract a new generation of potential traders not active in derivatives today,” he added. 

FanDuel CEO Amy Howe said in the statement that the agreement “will unlock our ability to bring even more new and engaging products to FanDuel’s fast-growing customer base.”

Following the FanDuel announcement, Truist Securities analysts wrote in a note that while it’s notable sports products were not mentioned, the partnership “should set them up to turn on that switch at some point should they choose.” Some states—such as Illinois—have raised taxes on online sports betting, making it “enticing” for regulated operators to move into prediction markets, Truist wrote.

FanDuel and all the other major sportsbooks have made clear they are watching the growing, and controversial, prediction-markets space. Peter Jackson, CEO of FanDuel’s parent, Flutter Entertainment, said in a letter to shareholders ahead of the company’s second-quarter earnings call on Aug. 7 that “we have two decades’ experience of operating the world’s largest betting exchange, the Betfair Exchange, which shares similar characteristics with event contracts, and this will help inform our views.” 

“We are closely monitoring regulatory developments, and are assessing the opportunities and potential participation strategies this may present for FanDuel,” Jackson added.

The sports betting industry has been paying great attention to the legal situation surrounding Kalshi, a major player in prediction markets that has been offering sports event contracts since January. (For example, Kalshi users can trade on everything from the winner of the ATP Winston-Salem Open tennis tournament to whether pro women’s basketball players will get a raise this year.)

The sports event contracts have garnered controversy because they appear so similar to sports betting. Traditional sportsbooks are regulated state by state. Kalshi, however, is federally regulated by the CFTC and has therefore been operating in states where sports betting is technically illegal, like Texas and California. 

Kalshi has argued in court that it differs from standard sportsbooks because, on its exchange, bettors are wagering against one another as opposed to the house.

Industry sources have expected a rash of activity ahead of football season, the busiest time for sports betting, and that has borne out. This week, Kalshi and Robinhood separately announced expansions of their sports event contracts products. Previously, Front Office Sports reported that DraftKings is in talks to acquire Railbird Exchange, an upstart prediction-market platform that recently gained federal licensure.

Robinhood is introducing new prediction markets that will allow users to trade on the outcomes of pro and college football games, the latest sign that controversial sports event contracts continue to have momentum despite legal challenges.

The new markets from Robinhood Derivatives LLC will be powered by KalshiEx LLC—the parent company of Kalshi, which on Monday informed the federal regulator Commodity Futures Trading Commission (CFTC) about new offerings of its own that let users trade on how many touchdowns a given player will score in a game, point spreads, and the overall total score. 

The timing is “strictly a coincidence,” JB Mackenzie, VP and GM of futures and international at Robinhood, tells Front Office Sports. 

“Football is far and away the most popular sport in America, and we felt it was the perfect time to launch these prediction markets ahead of the start of the college football season this weekend,” he says.

Robinhood says the new markets are actively being rolled out and will be available to “all eligible customers in the coming days.” To create a Robinhood account, users must be at least 18, among other requirements, according to the company website. To start, the company will offer event contracts for the first two weeks of the pro and college seasons, with additional matchups being added each week.

Robinhood isn’t rolling out point spreads or the other sorts of expanded offerings Kalshi just launched. For now, the company is keeping it simple with contracts on the outcomes of games, according to Mackenzie. The company also intends to allow users to trade on which team will win the Super Bowl and which team will win the College Football Playoff national championship, he says.

The trading platform also aims to expand its event contracts into additional sports-related production markets, and Mackenzie noted the company already offers access to contracts across sports like pro baseball, golf, and soccer (as well as non-sports-related contracts like crypto, economics, and culture).

Sports prediction markets, like those offered by Robinhood in all 50 U.S. states, have garnered controversy because they appear so similar to traditional sports betting, which is regulated on a state-by-state basis. Robinhood alluded to the backlash these event contracts have received, saying that “unlike sports betting, where the firm sets a line, event contracts leverage the power and rigor of financial market structure and are offered in a marketplace where buyers and sellers interact to set the price.”

“Customers can access the contracts in real time and manage risk by adjusting—or exiting—their positions up to and throughout a game before a contract expires,” the company added.

Robinhood has had a bit of a start-and-stop relationship with sports event contracts. Earlier this year, it announced a partnership with Kalshi under which users would be able to trade on the Super Bowl, only to suspend rollout of that feature the following day after the CFTC asked that it “not permit customers to access” sports event contracts. 

Not long after, Robinhood tried to take another stab at sports prediction markets, announcing it was entering a wide-ranging partnership with Kalshi that would include moneyline markets on the NCAA’s March Madness tournament. A little over a week later, the company pulled those markets out of New Jersey after pressure from regulators.

Kalshi has been the more high-profile company in terms of legal battles, although Robinhood was also roped into some of the lawsuits that sprouted from the sports prediction space. In June, Robinhood, Kalshi, and others were hit with five new lawsuits in five different state courts—by five LLC plaintiffs with very similar names—over allegations that their sports event contracts are in fact illegal sports betting products disguised as financial products. In July, Robinhood and Kalshi were sued by three Native American tribes over the legality of their sports prediction markets.

Robinhood has resumed sports-related offerings in New Jersey and Nevada and sued those states’ gaming regulators in federal court, citing early legal victories by Kalshi, which powers its sports event contracts.

The nearly identical suits, filed Tuesday, seek to stop potential enforcement actions from the state regulators in advance now that Robinhood is opening back up sports offerings to customers in New Jersey and Nevada. The suits were filed the same day the stock trading platform announced new prediction markets that will allow users to trade on the outcomes of pro and college football games.

A Robinhood spokesperson told Front Office Sports on Wednesday that the company’s event contracts “are offered in a compliant, federally regulated way through our CFTC-registered Futures Commission Merchant, Robinhood Derivatives.”

“This is a decisive step forward in our mission to democratize finance for all and unlock even more innovative market opportunities for investors,” the spokesperson said.

Robinhood had paused all sports-related event contracts in both states in March after receiving cease-and-desist orders from the New Jersey Division of Gaming Enforcement and the Nevada Gaming Control Board that threatened enforcement action if sports event contracts continued to be made available. 

That approach—to pause its sports event contract offerings—differed from Kalshi’s. 

Kalshi, which has received cease-and-desists from regulators in at least seven states, never stopped allowing users to trade on the outcome of sporting events. It took legal action much sooner than Robinhood, suing regulators in New Jersey, Nevada, and Maryland in the spring, arguing it falls under the exclusive jurisdiction of the Commodity Futures Trading Commission, a federal regulator.

Kalshi has racked up early victories in New Jersey and Nevada, with federal judges ruling the regulators cannot block it from offering sports event contracts while the cases play out. 

In the new lawsuits, Robinhood says that “despite those rulings,” the regulators continue to “threaten” enforcement, and that it is at the risk of immediate and irreparable harm. Robinhood says it has sought to open dialogue with the regulators, but officials have “informed Robinhood that they could not agree to refrain from enforcement action even while this Court’s order was in place concerning Kalshi.” Robinhood launched sports event contracts in February.

The suits seek to bar the regulators from taking action in light of the rulings in the Kalshi cases. They say Robinhood “stands to lose the goodwill of its customers”—including more than 48,000 people in New Jersey and 12,000 people in Nevada.

“This goodwill, once lost, cannot easily or quickly be regained, even if Robinhood ultimately prevails in litigation, and the risk to goodwill therefore also constitutes irreparable harm,” the suits say.

Notably, Robinhood did not sue the gaming regulator in Maryland, where Kalshi recently suffered its first legal setback when a federal judge ruled it must comply with state gambling regulations (although Kalshi appealed and the regulator in Maryland has agreed not to enforce its laws at least until the 4th Circuit rules on Kalshi’s appeal).

The New Jersey regulator declined to comment, and the Nevada regulator did not immediately respond to a request for comment.

Robinhood has had a bit of a start-and-stop relationship with sports event contracts. Earlier this year, it announced a partnership with Kalshi under which users would be able to trade on the Super Bowl, only to suspend rollout of that feature the following day after the CFTC asked that it “not permit customers to access” sports event contracts. Not long afterward, it tried to take another stab, announcing a wide-ranging partnership with Kalshi that would include moneyline markets on the NCAA’s March Madness tournament. A little over a week later, the company pulled those markets out of New Jersey after pressure from regulators.