Aug 20 (Reuters) - Sports betting firm FanDuel has tied

up with derivatives exchange CME Group ( CME ) to set its foot

into the rapidly growing event contracts market, the companies

announced on Wednesday.

Event contracts allow investors to bet on the likelihood of

specific events, ranging from sports and entertainment to

politics and the economy. The nascent asset class has exploded

in popularity in the U.S. since the 2024 presidential election.

CME and FanDuel will launch new products later this year,

allowing customers to express their views multiple times a day

for as little as $1.

The products will include benchmarks such as the S&P 500,

oil and gas, and gold prices, as well as key economic

indicators.

As part of the partnership, CME and FanDuel will form a new

joint venture and operate as a non-clearing futures commission

merchant.

"Individual investors are increasingly sophisticated and

continually pursuing new financial opportunities," said Terry

Duffy, chief executive of CME.

Sports betting heavy hitters have been actively assessing

event contracts opportunities while closely monitoring U.S.

regulatory developments.

FanDuel-owner Flutter also has over two decades of

experience operating Betfair, the world's largest betting

exchange, which shares similar characteristics with event

contracts.

While the event contracts landscape continues to evolve at a

rapid pace, its push to the mainstream has been riddled with

challenges on the regulatory front.

Prediction marketplace KalshiEX and the U.S. Commodity

Futures Trading Commission had tussled over a proposal to list

contracts that Americans could use to bet on election outcomes.

Robinhood also halted the rollout of its Super Bowl event

contracts in February, just a day after the launch, following a

request from the CFTC.

Exchange operator MIAX CEO Thomas Gallagher last week told

Reuters that the event contracts space is going to see "some

explosive growth" but cautioned there needs to be more clarity

on the regulatory front.

Critics have also likened event contracts to gambling and

say the asset class is introducing risk into financial markets.