FanDuel and DraftKings Expand into Prediction Markets Amid Regulatory and Competitive Challenges
In 2025, FanDuel and DraftKings launched their own prediction markets, marking a significant expansion into this growing sector alongside PrizePicks. DraftKings also acquired the prediction-market firm Railbird and introduced the DraftKings Predictions app, targeting states without legal sports betting and considering adding sports contracts later.
The prediction market industry is seeing rapid growth, with weekly volumes recently exceeding $2 billion across platforms such as Kalshi, Polymarket, Myriad, and Limitless. Certuity projects this market could reach $95.5 billion by 2035, growing at a compound annual growth rate (CAGR) of 46.8%. FanDuel, in partnership with CME, has expanded distribution by offering event contracts, with CME data showing 1,548 trades for S&P 500 event contracts in October and 25,998 trades year-to-date, alongside a record daily average of 26.3 million.
Despite the growth, challenges remain. Bank of America downgraded DraftKings and Flutter to neutral ratings due to declining margins, potential new taxes, and rising competition from prediction markets, setting price targets of $35 for DraftKings (DKNG) and $250 for Flutter (FLUT). Additionally, state gaming regulators are contesting federal oversight of prediction markets, advocating for state licensing, which could lead to Supreme Court considerations.
Regulatory scrutiny has intensified, exemplified by criticisms directed at FanDuel by Brian Krolicki during an October Nevada Gaming Commission meeting amid a broader federal sports gambling scandal. Meanwhile, Caesars Entertainment and MGM Resorts are closely monitoring the prediction market space but have no immediate plans to enter.
