Gambling companies undoubtedly face competition from prediction markets, but whether it’s more of a threat or an opportunity depends on what company you ask. Some have considered launching their own prediction market products, while others have dismissed them as distractions from their core gambling products.
Analysts asked several CEOs about prediction markets on their Q1 2025 earnings calls. Given Kalshi’s recent favorable rulings and the CFTC’s recent decision to dismiss its case over election contracts, gambling companies are more likely than ever to see the new space as a potential opportunity.
However, Kalshi’s lawsuits against state gambling regulators have yet to be settled. As of Q1 2025, major gambling CEOs are not ready to venture into prediction markets amid judicial uncertainty.
Several of them noted that prediction markets could be narrowly useful for acquiring customers in states without legal sports betting but wouldn’t generate the handle that parlays do for sportsbooks.
Overall, gambling companies appear to be in research and wait-and-see mode before they’ll be ready to become public participants in the prediction markets industry.
DraftKings not overly concerned from competition standpoint
DraftKings CEO, Jason Robins, had little to say about prediction markets on their last earnings call. He acknowledged the opportunity, but expressed concern about challenges from state regulators:
“You know, it’s definitely something that they’re talking about, and it’s early days so it’s hard to say at this point that it’s really catalyzed anything, because we haven’t seen any states that are like, yes, we’re going to do this now. But definitely, I think step one, which as you noted is getting their attention and making them start having those conversations, we are seeing that happen.”
He had more to say in a CNBC interview in which he was asked about competition from prediction markets. Following a pattern among gambling CEOs, he views prediction markets as a betting product that could appeal to people without legal sports betting in their states, rather than a replacement for sportsbooks in legal states:
“As far as legal sports betting, we really haven’t seen any impact. I’ve definitely heard that some of the hedge fund people are trading on those things in New York … but I think for the most part, it’s a bit of a different customer segment and I think for the type of bettor segment we have, it’s going to appeal really more to states that don’t have legal sports betting, less so in states that do have legal sports betting.”
FanDuel evaluating the opportunity
Flutter Entertainment CEO, Peter Jackson, noted during their Q1 earnings call that the company was evaluating the prediction market model. He even revealed the team had pulled some Betfair exchange employees to evaluate the opportunity:
“We have brought some of our team who have experience in building these products and services from the Betfair exchange business and put them into FanDuel to help us evaluate the opportunity.”
However, that doesn’t mean FanDuel is pivoting to the prediction market model. FanDuel remains focused on offering competitive parlay products and doesn’t want to abandon its market-leading sportsbook. Jackson also viewed the opportunity in states without sports differently from those that have legalized it:
“Clearly, in states that haven’t regulated, there’s a sort of prime the pump type of opportunity that is not that dissimilar to some of the DFS stuff, albeit it’s worth remembering that DFS is a really good precursor to the parlay product, whereas the prediction markets are quite limited.”
Prediction markets may be an opportunity, but FanDuel doesn’t seem to be planning an overhaul to jump in.
BetMGM sees 'small risk' from sports event contracts
BetMGM CEO, Adam Greenblatt, views prediction markets as a niche product that falls outside of gambling companies’ core products. Considering whether BetMGM would expand into prediction markets, Greenblatt said:
“…in our existing online sports betting states, it represents a degree of small risk, only because the markets that prediction markets serve would be lower-margin for operators. There would be no impediment to sports betting operators participating in that market, so we wouldn’t lose that business in time. It would just come into less revenue for the operator.”
Viewing prediction markets as a way to reach small markets that were unprofitable for sportsbooks to enter contrasts with the bullish attitude companies like Kalshi have about their 50-state market access. Like the other CEOs, BetMGM seems unconcerned about its own business in the wake of sports contracts’ expansion.
Caesars also unthreatened by sports prediction markets
Caesars Entertainment CEO, Tom Reeg, also seemed unthreatened by prediction markets. He offered a brief reply to an analyst who asked whether Caesars faced competition from sports contracts:
“…there’s zero impact so far in that business for us. Your opinion is as good as mine in terms of what’s going to happen. If there are ways to drive more EBITDA through our business that open up through legislation or regulation, you should assume that we’re going to look to how we can take advantage of those opportunities to the greatest extent possible for our shareholders.”
It was one of the most “maybe” responses from the gambling CEOs about whether they would try to move into prediction markets.
PENN sees prediction markets as 'niche'
The CEO of Penn Entertainment, Jay Snowden, considers prediction markets a side issue for his company. Like the other CEOs, Snowden views prediction markets as products best suited for states without legal online sports betting:
“It is interesting. It does exist, as you guys know, it has for a long time over in Europe. I think it is definitely more of a niche market for a variety of reasons. I think it’s largely incremental, especially if it’s something that’s being offered in states where online sports betting is not currently legal. So I think more to come on that. It’s obviously not priority one for us.”
While prediction markets are clearly worth watching, the conflicts between state gambling regulators and federal prediction markets make the emerging industry risky for established gambling products and companies to pivot to, especially publicly at this point.
What is clear is that prediction markets are very much on the radar of gambling companies, especially those with a focus on sports betting.
