PrizePicks was approved as a futures commission merchant (FCM) on Monday (22 September), a move that could open the door to offering regulated prediction markets on sports.
The registration coincided with Allwyn International’s announcement that it would acquire a 62.3% stake in the company, in a deal potentially valuing the company at more than $4bn.
The approval, granted to PrizePicks subsidiary Performance Predictions II LLC, was processed by the National Futures Association on behalf of the Commodity Futures Trading Commission (CFTC).
The entity will operate under the name PrizePicks Predict. As an FCM, PrizePicks can partner with designated contract markets such as Kalshi or Crypto.com to offer regulated event contracts.
Robinhood already operates in a similar capacity, providing Kalshi’s markets to customers through its own FCM status.
PrizePicks would become only the second fantasy sports operator to enter the regulated prediction markets space.
Earlier this month, rival Underdog Sports began offering sports prediction markets through a deal with Crypto.com. Unlike PrizePicks, Underdog does not hold FCM status but acts as a technology partner under a structure that still enables it to facilitate event-based prediction markets.
Allwyn’s planned investment in PrizePicks represents its largest US transaction to date and signals a broader push beyond traditional lottery operations.
Analysts, however, remain cautious about the deal’s long-term value.
Regulus Partners highlighted that major daily fantasy pioneers FanDuel and DraftKings have already entrenched themselves as sportsbook leaders, leaving little room for a late entrant to gain comparable traction.
Transitioning market may bring instability
PrizePicks recently transitioned to a peer-to-peer model called Arena, discontinuing its Pick’em contests against the house.
The change began in California in June before being expanded nationwide in August. While the shift aligns with regulatory pressures, it complicates the company’s ability to sustain its previous levels of revenue growth.
Analysts warned that a slower growth trajectory could compress operating margins in an increasingly competitive environment.
Regulus further noted that while PrizePicks promotes its availability in over 90% of US states and Canadian provinces, its offering in key markets such as New York, New Jersey, Michigan, and Ontario is limited to free-to-play contests.
These jurisdictions already have legalised online sports betting, where FanDuel and DraftKings dominate.
This juxtaposition is indicative of the tenuous balance between expansion potential and regulatory exposure facing PrizePicks and its new majority owner.
For Allwyn, the acquisition represents both an opportunity and a risk.
The $1.6bn cash commitment reflects a serious strategic bet, but Regulus analysts suggest it could be more of a tool to undermine competitors’ real-money ambitions than a true bridgehead into the market.
With regulatory scrutiny intensifying, both companies will be left to demonstrate whether the FCM route can be leveraged into a sustainable presence in the evolving US betting landscape.