Monday was a busy day for US daily fantasy sports operator PrizePicks.
First came the announcement that international lottery specialist Allwyn had acquired a 62.3% stake in the business for initial consideration of $1.6 billion, which could grow by an additional $1 billion if performance incentives are met over the next three years. The deal implied a current valuation of the business at $2.5 billion, which could rise to $4.15 billion if the incentives are reached.
The Atlanta-based company was also approved on Monday for a futures commission merchant (FCM) licence from the National Futures Association. The NFA processes such applications on behalf of the Commodity Futures Trading Commission, and an FCM licence allows for expansion into the prediction market space.
Prediction markets are regulated at the federal level by the CFTC, a key point of contention from state-regulated sportsbooks. Performance Predictions II LLC was awarded the licence, which, as SBC reported last month, is an entity tied to PrizePicks. In the NFA database, the application lists the entity as doing business as “PrizePicks Predict”.
An FCM licence allows PrizePicks to offer prediction market contracts from designated contract markets (DCMs) like Kalshi and Crypto.com. Chief DFS rival Underdog currently offers sports contracts in 16 states through a deal with Crypto.com. No such arrangement from PrizePicks has yet been announced.
Prediction markets likely part of valuation, projections
The timing of both developments is likely an indication of why the company’s valuation rose to where it did. By comparison, Underdog’s most recent valuation from the spring was $1.2 billion, half of PrizePicks’ number under the Allwyn deal.
However, that was before Underdog expanded into prediction markets and before the industry got a sense of how much CFTC-licensed exchanges could be worth.
In July, the controversial offshore prediction market Polymarket acquired a small exchange known as QCEX for $112 million. Polymarket bought QCEX as a means to regain access to the US market, and it paid a premium, as the exchange had just been licensed by the CFTC two weeks prior. That figure is one of the few comparisons available for such deals or partnerships.
According to the Allwyn release, PrizePicks grew its revenue by 60% year-on-year in the 12 months to June 2025. Its adjusted EBITDA for that period was $339 million. The company is only 10 years old, founded in 2015 by Adam Wexler. PrizePicks will remain as an independent brand under Allwyn, and both Wexler and current CEO Mike Ybarra will stay on through the merger.
Growing prediction market landscape for PrizePicks
The deal is the latest indication of the allure of prediction market expansion. Trading volume, which is similar but not identical to sportsbook handle, has been growing quickly for sports prediction markets, especially now that football season is back in the US.
Exchanges are now processing millions of dollars in contracts weekly, though exact revenue from that volume is hard to gauge accurately. Regardless, the success of the products and inaction on the part of the CFTC indicate increasingly attractive opportunities.
In addition to PrizePicks and Underdog, others are making moves. FanDuel brokered a prediction market deal with CME Group, albeit without sports for now. DraftKings has been connected to different possible prediction market avenues, both on its own or through the rumoured acquistion of the Railbird exchange.
According to the SBC report, Fanatics Betting and Gaming also has a pending application with the NFA.
Multiple states – Nevada, New Jersey, Maryland and now Massachusetts – have taken legal action against prediction markets, most notably Kalshi. Several more have sent cease-and-desist letters. However, exchanges have had success so far arguing that federal commodities law preempts state gaming law. All four state cases are still ongoing, and there is a growing sense the matter could reach the US Supreme Court.
DFS industry in state of limbo
In the meantime, the DFS landscape in the US is growing increasingly muddy. PrizePicks helped to pioneer the “DFS 2.0” wave, in which users can create “pick ’em” parlays based on individual player performances. There are two real-money versions of these games, peer-to-peer and against-the-house.
As with prediction markets, the against-the-house version has been controversial for its potential circumvention of state laws, but it is extremely popular with players. Pick ’em games are a gray area that vary in legality by state, but the tide has been shifting against the offering.
Last February, PrizePicks was fined $15 million by the New York State Gaming Commission for operating without a licence, and it ceased to operate its real-money against-the-house games in the state. Then in July, California Attorney General Rob Bonta published a non-binding opinion arguing that essentially all forms of DFS are illegal in the state. This was a bombshell for the industry and a concrete resolution has yet to be established.
PrizePicks responded last month by pulling all of its against-the-house games and instead switching purely to peer-to-peer. This move was widely regarded as a means to remove any lingering regulatory questions ahead of an acquisition.
Currently, PrizePicks offers its real-money peer-to-peer game in 35 states plus Washington, DC. This includes non-sports betting states like California, Utah and Texas. Its free-to-play games are offered in 10 other states.
Original article: https://igamingbusiness.com/strategy/prizepicks-nfa-prediction-market-licence-approved/
