Just days after DraftKings Inc. (DKNG.US) introduced its prediction market app, its competitor FanDuel announced the official launch of a similar product in five U.S. states. The new app, named "FanDuel Predicts," will allow users to place bets on sports events, cultural happenings, and financial indicators through a prediction market trading platform, complementing FanDuel's existing sports betting offerings.
Prediction markets have surged in popularity in recent months. In states where online gambling remains illegal, these platforms operate under federal regulatory compliance, successfully carving out market space. These exchanges offer dollar-denominated contracts whose prices directly reflect the probability of an event occurring—a more intuitive approach compared to traditional sports betting odds.
The FanDuel app will initially be available to users in Alabama, Alaska, South Carolina, North Dakota, and South Dakota, with plans for a phased nationwide rollout. James Cooper, Senior Vice President at FanDuel, stated, "Launching in these five states first will provide valuable insights into user engagement, helping us refine our operational strategy as we expand to more states by 2026."
DraftKings, FanDuel's rival, announced last Friday that its prediction market app would be available in 38 states, though only 18 of them permit sports betting. FanDuel, the U.S. online gambling division of Flutter Entertainment PLC (FLUT.US), partnered with derivatives exchange operator CME Group (CME.US) to launch the app. DraftKings also revealed that its trades currently go through CME but disclosed plans to migrate transactions to its own platform after acquiring a derivatives exchange.
Sports betting companies are rapidly entering this emerging sector to counter competition from startups like Kalshi and Polymarket, which pioneered this new form of event-based betting. FanDuel plans to offer contracts tied to economic data, commodity prices, and stock indices across all 50 states, while sports-related contracts will only be available in states where online sports betting remains unregulated.
Sports betting firms have been cautious about expansion, as some state regulators have warned that offering prediction markets alongside sports betting could risk license revocation. Notably, prediction trading platforms fall under the oversight of the U.S. Commodity Futures Trading Commission (CFTC), the federal agency regulating derivatives markets.
Between August and November, shares of both DraftKings and Flutter declined as investors worried about competition from prediction market startups like Kalshi and Polymarket, which operate under lighter regulatory constraints. However, Flutter's stock rebounded after announcing the FanDuel Predicts app. Last Friday, the company's shares rose as much as 1.7% intraday before closing 0.8% higher.
Comments