FanDuel and DraftKings Expand into Prediction Markets Amid Industry Challenges
In 2025, FanDuel and DraftKings launched prediction markets, with PrizePicks also entering the space. Weekly prediction-market volume surpassed $2 billion across platforms such as Kalshi, Polymarket, Myriad, and Limitless, and the market is projected to reach $95.5 billion by 2035, growing at a 46.8% compound annual growth rate according to Certuity.
Despite this growth, Bank of America downgraded DraftKings and FanDuel (Flutter) due to a “perfect storm” of declining margins, potential new taxes, and increased competition, lowering price targets to $250 from $325 for Flutter and $35 from $40 for DraftKings.
Regulatory challenges persist as state regulators are contesting federal oversight of prediction markets, which could result in state-level licensing and possible Supreme Court involvement. Kalshi requires a Commodity Futures Trading Commission (CFTC) license, while states push for their own licensing authority.
In Nevada, regulator Brian Krolicki criticized FanDuel during a late-October 2025 meeting over conflicts between shareholders and regulators amidst a broader sports-gambling crackdown. On the same day, the FBI announced arrests related to a major sports-gambling scandal.
DraftKings announced the acquisition of Railbird about two weeks before November 6, 2025, planning to build DraftKings Predictions. Initially, the app will focus on states without legal sports betting, offering contracts related to finance, culture, and entertainment, with the possibility of adding sports contracts later.
FanDuel’s August deal with the Chicago Mercantile Exchange (CME) aims to offer event contracts and expand distribution. CME’s October S&P 500 event-contract trades totaled 1,548, up 41% year-over-year, with a year-to-date total of 25,998 trades. CME’s daily contracts in October averaged 26.3 million, demonstrating significant exchange activity in event derivatives.
