FanDuel and DraftKings Expand into Prediction Markets Amid Regulatory and Competitive Challenges
FanDuel and DraftKings launched prediction markets in 2025, with PrizePicks also entering the sector. Weekly prediction-market volume surpassed $2 billion across platforms including Polymarket, Kalshi, Myriad, and Limitless, while Certuity projects this market could reach $95.5 billion by 2035, growing at a 46.8% CAGR.
Bank of America recently downgraded DraftKings and Flutter Entertainment (FanDuel’s parent company), citing declining margins, increasing taxes, and rising competition from prediction markets. The price targets were set at $35 for DraftKings (DKNG) and $250 for Flutter, with both ratings moved to Neutral.
Prediction markets face complex regulatory environments, as they are federally regulated by the Commodity Futures Trading Commission (CFTC), but state regulators are seeking to require additional licenses. This regulatory tension may lead to a legal clash potentially advancing to the Supreme Court.
Adding to regulatory scrutiny, a Nevada regulator criticized FanDuel during an October meeting, coinciding with an FBI sports gambling scandal announcement that same day, increasing uncertainty in the market.
In response, major players such as Caesars and MGM are monitoring prediction markets but have no immediate plans to enter. FanDuel has partnered with the Chicago Mercantile Exchange (CME) to offer event contracts, while DraftKings acquired Railbird and launched the DraftKings Predictions app, focusing on states without legal sports betting and expanding offerings beyond sports to finance, culture, and entertainment contracts.
