00:00Sam, let's talk about Arizona, the state of Arizona, along with many others, seem to be now finally having some pushback against these prediction markets.
00:08So naturally, if you're going to operate in a state where the state feels that it is illegal, it needs to be regulated, and you need to pay taxes, then you're going to have to stop operating.
00:16And that, indeed, is coming from one non-sports betting operator, ironically, a daily fantasy peer-to-peer operator.
00:23Yeah, the Arizona Department of Gaming this week sent underdog a notice of violation and intent to revoke its fantasy sports license.
00:35Arizona, one of the number of states underdog, has conducted fantasy sports business in for a number of years.
00:41Some states require a license, some states don't.
00:44If you recall anything about the prediction market landscape, a lot of states are really upset.
00:49They believe that sports prediction markets are essentially bypassing their state laws.
00:53And kind of lying about being under federal oversight instead.
00:57There's a bunch of lawsuits going on right now.
01:00But underdog actually has a partnership with Crypto.com, which is one of these big sports prediction market platforms.
01:06And under that partnership, it hosts Crypto.com sports prediction markets on its website.
01:13That website actually isn't available in Arizona.
01:16Underdog is not offering prediction markets in Arizona.
01:19But the Department of Gaming is saying because you're partnering with Crypto.com, which is also offering its prediction markets in Arizona and elsewhere, you're essentially aiding and abetting what they're calling is an illegal practice, an illegal gaming operation, legitimizing them.
01:34And they're saying that, you know, as a licensee of Arizona, they're not going to tolerate them allowing basically an enemy of the state to do business and benefit from that business.
01:46So Arizona, immediately, you cannot do underdog fantasy products there right now.
01:53The popular pick'em games they have, of course, as well as a host of other fantasy formats.
01:58But underdog actually has about 30 days to appeal the notice, which is when they're going to kind of prepare arguments that have been made a lot in federal and state courts recently, where the same kind of battles between prediction markets and states and other gaming regulators are playing out.
02:15Where on one side, you have prediction markets like Crypto.com and its partners saying, you know, these are subject to CFTC oversight, these are federally regulated.
02:24And then states on the other side saying that's not true, it was never intended that way.
02:28This is de facto sports gaming.
02:30So we'll see what shakes out with that appeal.
02:32I wouldn't hold your breath for underdog winning the appeal because they'll be making the argument before the regulators themselves, basically telling them why they shouldn't have oversight over this thing.
02:44So it'll be pretty interesting to see kind of if other states follow.
02:49Obviously, a number have taken action against prediction markets, as well as companies like Underdog, which have traditionally been fantasy operators or sports betting operators and are now doing prediction markets themselves.
03:00You have Fanatics recently doing it.
03:02And then any day now, I'm told FanDuel and DraftKings are going to do their own.
03:05So you already have one state taking action against a licensee.
03:09It'll be interesting to see when the other licensees inevitably kind of break their laws, what will happen next.
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