Arizona confirms notice of violation against Underdog DFS
Arizona gaming regulator has formally moved to revoke Underdog’s daily fantasy sports (DFS) licence, citing the operator’s continued partnership with Crypto.com despite prior warnings that the relationship violated state law.
The Arizona Department of Gaming (ADG) confirmed to SiGMA News that it issued a Notice of Violation and Intent to Revoke to Underdog on 5 December 2025.
“The Department issued a notice of intent based on the licensee’s continued partnership with an operator that the Department had previously ordered to cease certain activities in Arizona for conduct alleged to be unlawful, despite prior notice and warnings,” an ADG spokesperson told SiGMA News.
The spokesperson added that the notice is subject to Arizona’s administrative appeal process and that no final determination has yet been made. Underdog remains authorised to operate in the state while the appeal is ongoing.
Crypto.com partnership at centre of dispute
First reported by Sports Betting Dime, ADG wrote in the 5 December letter: “ADG has determined that Underdog, by contracting with Crypto, benefitting from Crypto’s services, supporting Crypto’s interests, and providing financial support to Crypto is aiding and abetting Crypto’s illegal conduct in Arizona and providing it with a façade of legitimacy.”
Arizona officials signalled their intention to strip Underdog of its DFS licence, arguing that its relationship with Crypto.com breached the terms of its state approval. Regulators said Crypto.com’s sports event contracts, a form of prediction market, constitute illegal gambling under Arizona law. They further warned that even maintaining a partnership with a prediction market operator violated Underdog’s DFS licence agreement, regardless of whether those products were offered directly in Arizona.
In May, Crypto.com had been ordered to cease offering prediction markets in Arizona, a move that ultimately triggered the enforcement action against Underdog. Arizona Office of the Governor Senior Policy Advisor Chris Kotterman told Covers last week that the state’s action was tied to Crypto.com’s prior operations within Arizona and was not related to the companies’ ongoing sports event contract offerings in other jurisdictions.
Kotterman said the decision was “unrelated to Underdog and Crypto’s ongoing sports event contract offerings in other states,” emphasising that Arizona’s concern stemmed from conduct previously taking place within state lines.
Crypto.com exits Arizona prediction markets
Following the warning, Crypto.com stopped offering its prediction market products in Arizona on 12 December, according to Sports Betting Dime. The company has reportedly withdrawn its prediction market offerings in eight other states, including Michigan, Maryland, Massachusetts, Illinois, New Jersey, Nevada, and Ohio.
Despite that withdrawal, regulators proceeded with enforcement action against Underdog, citing the operator’s continued commercial relationship with Crypto.com. According to InGame, Underdog has indicated it plans to appeal the notice of intent to revoke its DFS licence.
Conduct within the state? This is about a business relationship we have that doesn’t affect Arizona at all. In fact Arizonans cannot even see PMs in our app. https://t.co/aPwi8s6GNr
— Nicholas Green (@nickggreen) December 13, 2025
In a social media post, Underdog general counsel Nicholas Green said the company’s prediction market relationship with Crypto.com in other states does not affect its fantasy sports operations in Arizona. Green stressed that Underdog users in Arizona cannot access sports event contracts through the platform.
Beginning of the partnership
Underdog kicked off September with a major industry first, officially bringing sports event contracts to market through a new partnership with Crypto.com. The announcement, made on 2 September, marked the first time a sportsbook operator launched sports event contracts.
The partnership took off in 16 US states, but Underdog did not disclose the full list. Reporting from CNBC suggested the offering is largely targeting states where sports betting was not yet legalised, such as California and Texas.
Broader regulatory implications
The latest dispute highlights growing regulatory tension around prediction markets and their intersection with traditional fantasy sports and gambling frameworks. US regulators and state gaming authorities have increasingly scrutinised sports event contracts, with several states arguing that such products fall outside existing legal definitions for DFS or commodities trading.
While the ADG emphasised that no final decision has been reached, the case could set an important precedent for how partnerships between DFS operators and prediction market platforms are treated at the state level. For now, Underdog remains licensed and operational in Arizona, pending the outcome of the administrative appeal process.
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