FanDuel and DraftKings Expand into Prediction Markets Amid Regulatory and Competitive Challenges
FanDuel and DraftKings launched prediction markets in 2025, with PrizePicks also joining the space. DraftKings acquired Railbird and plans to launch the DraftKings Predictions app, which will initially focus on states without legal sports betting and offer finance, culture, and entertainment contracts, with potential for sports contracts later.
Weekly prediction-market volume has topped $2 billion across platforms such as Kalshi, Polymarket, Myriad, and Limitless, with Certuity projecting the market to grow to $95.5 billion by 2035 at a compound annual growth rate (CAGR) of 46.8%.
Bank of America downgraded DraftKings and Flutter (the parent company of FanDuel), citing declining margins, potential new betting taxes, and increased competition from prediction markets. The price targets set were $35 for DraftKings (DKNG) and $250 for Flutter (FLUT), both with neutral ratings.
State regulators are pushing for licensing of prediction markets, which creates tension with federal oversight by the Commodity Futures Trading Commission (CFTC). This regulatory conflict could potentially be addressed by the Supreme Court. The Nevada Gaming Commission criticized FanDuel in an October meeting for conflicts between shareholders and regulators amid broader scrutiny following a major sports gambling scandal.
Differences between traditional sports betting and event contracts are being emphasized: sports betting is regulated at the state level, whereas event contracts are federally regulated by the CFTC. These regulatory dynamics could influence market competition between established incumbents and new entrants like Kalshi and Polymarket.
