FanDuel and DraftKings Enter Prediction Markets Amid Regulatory and Competitive Challenges
In 2025, FanDuel and DraftKings launched their own prediction markets, marking a significant expansion in the sports betting and event prediction industry. PrizePicks also entered the market, contributing to a weekly prediction-market volume topping $2 billion. The market is forecasted to reach $95.5 billion by 2035, with a compound annual growth rate (CAGR) of 46.8%.
Despite rapid growth, challenges persist as state regulators are pushing back against federal oversight. The Commodity Futures Trading Commission (CFTC) currently regulates prediction markets, but ongoing tensions have prompted states to seek their own licensing authority, with potential for Supreme Court review. Key platforms in this space include Kalshi, Polymarket, Myriad (a Dastan product), and Limitless, collectively handling over $2 billion in weekly volume.
In August, FanDuel expanded its distribution by striking a deal with CME to offer event contracts via the FanDuel app. However, the company faces regulatory hurdles, especially in Nevada, where regulator Brian Krolicki noted challenges amid broader enforcement issues, heightened by a recent FBI gambling scandal.
Meanwhile, industry giants Caesars Entertainment and MGM Resorts remain cautious, monitoring the sector with no immediate plans to enter and prioritizing safeguarding their existing licenses.
On the corporate front, DraftKings recently completed the acquisition of Railbird and is poised to launch the DraftKings Predictions app in states without legal sports betting. This app will initially focus on contracts related to finance, culture, and entertainment, with potential future expansion into sports contracts.
Bank of America downgraded both DraftKings and Flutter Entertainment (FanDuel's parent company), citing declining margins and intense competition. Price targets were reduced to $35 for DraftKings and $250 for Flutter, reflecting the challenging environment despite the promising growth potential in the prediction market sector.
