The Arizona Department of Gaming (ADG) has announced a historic enforcement action regarding prediction markets by notifying Underdog of its intent to revoke the company’s fantasy sports contest operator license, originally granted on August 23, 2021.

This decision stems from concerns about Underdog’s business association with Crypto.com and its offering of sports event contracts, which state officials have identified as illegal gambling activities. Investigators from the ADG found that although Underdog does not directly provide prediction market services in Arizona, its partnership with Crypto.com implicates it in unlicensed operations within the state.

The department asserts that Underdog’s involvement transcends a mere passive relationship, playing an active role in undermining Arizona’s gaming regulations. In documentation obtained through a public records request, the ADG articulated its belief that Underdog’s affiliation with Crypto.com constitutes support for unlawful gaming practices.

They concluded that Underdog is facilitating Crypto.com’s activities in Arizona, despite prior state directives prohibiting the exchange from offering sports event contracts.

The ADG stated, “We have determined that Underdog, by contracting with Crypto, benefiting from Crypto’s services, supporting Crypto’s interests, and providing financial assistance, is aiding and abetting Crypto’s illegal conduct in Arizona and is providing a façade of legitimacy.

Furthermore, this association poses a threat to the public interest in this State.” Consequently, the Department has issued a formal notice to Underdog regarding the intent to revoke its fantasy sports contest operator license FS200008.