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It’s good to be FanDuel, right? Since legalized sports betting became a thing in 2018, they’ve worked their way into becoming the number-one sports betting apps. FanDuel has fended off steep competition from the likes of BetMGM, DraftKings, and plenty of others.
But… the growth story might be over for FanDuel. At least that’s the perception on Wall Street. Flutter Entertainment, the parent company of FanDuel, has seen its stock price hammered all year, down roughly 25 percent since January.
That’s because stocks are priced in future revenue, and well, FanDuel is believed to be hitting a wall. That’s because 39 states have already legalized sports betting. The 11 holdovers, including the likes of Alabama, California, and Texas, aren’t biting. So on Wall Street, FanDuel is seen as tapped out.
Enter prediction markets. These have burst on the scene this year. Almost out of nowhere, places like Kalshi and Polymarket are gaining market share on traditional sports wagering. The best part? For now, these are federally legal. That’s because they’re treated as stock options, not sports betting. So prediction markets are fully available in all states, even those without legalized betting like Alabama.
This was thought to be a lifeline to FanDuel. It would allow them to enter markets they don’t have access to, and yes, grow revenue and get the stock price back on the up and up. Or so we thought. The latest developments show that FanDuel isn’t ready to make that leap quite yet. Keep reading, and we’ll explain.
FanDuel Makes A Safe Bet With Prediction Markets
FanDuel has made one thing perfectly clear: if prediction markets threatened its sportsbook empire, they wouldn’t touch them. They simply have too much to lose being the top betting app. Flutter has spent months game-planning how to launch prediction markets without blowing up its licensing relationships across the country. We say that because many states have threatened to revoke the licenses of sportsbooks that enter prediction markets.
Here’s what we know about FanDuel’s plans: they will only offer prediction markets in states where it doesn’t already run sports betting. Alabama bettors reading this, you’re out of luck here. That sidesteps state regulators’ concerns. It also turns prediction markets into a pure acquisition channel. Think of it as a farm system. Bring in users now, hold onto them, and convert them the second a state legalizes sports betting.
This isn’t new territory for FanDuel either. They used fantasy sports the same way. And it worked. Missouri is the prime example — the state launches sports betting next month, and FanDuel already has more than 110,000 users they picked up through fantasy and free-to-play games. Now they’re running that same playbook in other states, where betting is already legal or soon could become legal.
And from a revenue standpoint? Prediction markets are low-risk, low-cost. No bookmaking, no liability, just exchange fees. That’s why Flutter sees it as an easy add-on, not a replacement for sports betting.
Regulatory Risk Remains For FanDuel
None of this happens without the elephant in the room: regulators. Nevada already killed a potential FanDuel state license (they are currently not licensed but were on the verge of it) earlier this year due to prediction markets, and that spooked the industry. The thought was that other states would follow the way of Nevada.
To calm everyone else down, Flutter has been making the rounds behind the scenes — regulators, tribal partners, gaming boards. They’re telling everyone the same thing: prediction markets will never run in your state if FanDuel already has a sportsbook license there.
Some states aren’t totally buying it. Several are still suing Kalshi and other prediction-market players, warning that these products blur the line into gambling. But as of now, no state besides Nevada has threatened FanDuel’s sportsbook license.
They’re gambling on one bet: regulators care more about control than about shutting down innovation. If FanDuel plays by the rules, the licenses should stay safe. At least, that’s the plan.
How Prediction Market Fits Into FanDuel’s Long-Term Plans
FanDuel isn’t pretending prediction markets will fix its stock price overnight. So this is a long-term play, and they’re treating the launch exactly like entering a new sportsbook state, just with far less financial pain on the front end.
Flutter’s CFO Rob Coldrake says it’s a three-year plan that works out like this:
• Year 1: heavy investment (and incur losses)
• Year 2: contribution-positive
• Year 3: cumulative profitability
Even the big “loss” number — the projected $200–$300 million tied to the rollout — is tiny compared to a normal state launch. Under the traditional model, entering a sportsbook state costs about $35 million per 1 percent of the U.S. population. That means California alone would cost well over half a billion dollars. Prediction markets give FanDuel national reach for a fraction of that.
So at the end of the day, FanDuel is betting the same way they always do — get users early, keep costs low, and let scale do the rest. Prediction markets are just the next version of that strategy.
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