Flutter Entertainment's (FLUT) FanDuel venture with CME Group to offer bets on stocks and commodity prices is seen as positive, Oppenheimer said Thursday in a report.

The alliance gives FanDuel "the optimal strategy to be agile with prediction market developments while also appeasing key regulators and stakeholders," the report said.

FanDuel, the online gambling division of Flutter Entertainment, and CME, the largest US derivatives exchange, said Wednesday that they plan to offer event-based contracts tied to the S&P 500, the Nasdaq 100, oil, gold, cryptocurrencies and economic indicators such as gross domestic product and the consumer price index. The products are expected to launch later this year, allowing customers to take "yes" or "no" positions for as little as $1.

CME and FanDuel said they will form a joint venture and operate a nonclearing futures commission merchant to facilitate access to the event-based contracts through FanDuel.

The venture may expand to include contracts across other markets, including sports, entertainment, politics and culture, "as its strategy, regulatory position and stakeholder sentiment develop over time," Oppenheimer said.

The total US prediction market may generate $1.8 billion to $6.3 billion in revenue over the next 12 to18 months, or 13% to 46% of current online sports betting gross gaming revenue, Oppenheimer said.

FanDuel rival DraftKings (DKNG) may pursue a similar strategy via an exchange regulated by the Commodity Futures Trading Commission, among other options, the report said.

Oppenheimer maintained its outperform rating on Flutter Entertainment stock and kept its $350 price target.

Flutter Entertainment shares fell 0.3% in recent Thursday trading. CME Group dropped 0.4%, and DraftKings rose 0.2%.

Price: 293.63, Change: -0.90, Percent Change: -0.31