(Reuters) -Sports betting firm FanDuel has tied up with derivatives exchange CME Group 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.