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DraftKings and Flutter Entertainment, the parent company of FanDuel, said this week that prediction markets are not meaningfully hurting their traditional sportsbook businesses, even as both companies face investor pressure and ongoing legal uncertainty around sports event contracts.
DraftKings CEO Jason Robins said the company sees “no discernible impact” from prediction markets on its core sportsbook business. Flutter said FanDuel has seen only a “low single-digit” impact.
Both operators launched prediction-market platforms late last year, targeting states where online sports betting is not legal, including large markets such as California, Texas, and Georgia.
What the operators told investors
DraftKings and Flutter both missed earnings expectations this week. DraftKings maintained its full-year guidance, while Flutter cut its full-year profit guidance by 22%.
Despite that backdrop, both companies argued prediction markets are not pulling away many existing sportsbook customers.
Robins said DraftKings sees about 1% customer overlap between its sportsbook and the “largest prediction-market operator” in states with legalized sports betting. He also said DraftKings’ own prediction-market platform is growing faster than expected.
On DraftKings’ earnings call, Robins said, “Our core business is not seeing much of any impact from predictions. And we’re still growing, strong, and healthy, and generating significant cash flow.”
Why analysts still see a risk
Not everyone agrees the threat will stay limited. Analyst Jordan Bender said in January that prediction markets were creating roughly a 5% cannibalization impact across the sports-betting industry, and he said he remains confident in that estimate.
Bender also warned that more aggressive marketing around the NFL season could increase pressure rather than reduce it. Analyst Barry Jonas called the degree of cannibalization “debatable,” but said it could become more meaningful as prediction-market products mature.
That matters for California readers because prediction-market products have been pitched as a way to reach customers in states without legal online sports betting. At the same time, the legal status of sports event contracts remains unsettled.
What to watch next
Jonas said multiple lawsuits over sports event contracts are moving through the U.S. court system, and that the U.S. Supreme Court is expected to eventually take up the issue. He also noted that some states are already considering whether prediction markets should be taxed.
For players, the near-term takeaway is that major operators are still treating prediction markets as a developing business line, not a proven replacement for sportsbooks. The bigger question is whether future court rulings or state action could change how these products are offered in places such as California. As always, gamble responsibly.
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Source: As reported by Ben Horney.
