FanDuel and DraftKings Enter Prediction Markets Amid Regulatory Scrutiny and Market Growth
FanDuel and DraftKings launched prediction markets in 2025, with PrizePicks also entering the space. Weekly prediction-market volume has topped $2 billion across platforms including Polymarket, Kalshi, Myriad, and Limitless. The market is projected to reach $95.5 billion by 2035, growing at a compound annual growth rate (CAGR) of 46.8%, according to Certuity.
Despite this growth, Bank of America downgraded both FanDuel and DraftKings, citing declining margins and increased competition. Consequently, Flutter's price target was lowered to 250 and DraftKings' to 35.
State regulators are challenging federal oversight and licensing of these markets, prompting a potential Supreme Court case concerning state versus federal authority. Nevada regulators scrutinized FanDuel in October amid a broader sports gambling scandal, describing the situation as a "crucible" for regulation.
Meanwhile, Caesars and MGM are monitoring the prediction-market space but currently have no immediate plans to enter, partly due to risks associated with existing licenses.
FanDuel partnered with CME in August to offer event contracts and expand distribution through the FanDuel app; these contracts mainly cover economic indicators. DraftKings acquired Railbird and plans to launch DraftKings Predictions in states without legal sports betting. Initially, it will offer finance, culture, and entertainment contracts, with sports contracts possibly added later.
