By Nate Wolf
The sports-betting duopoly DraftKings and FanDuel aren't just competing with each other anymore. Prediction markets may be eating into their businesses.
Shares of DraftKings and Flutter Entertainment, FanDuel's parent company, fell sharply Tuesday, two days after the prediction-market start-up Kalshi reported a record volume of trading over the weekend, due in large part to NFL and college football games.
"Nothing beats football in America," wrote Kalshi CEO Tarek Mansour on X.
Unlike traditional betting, in which gamblers essentially wager against the bookmakers, Kalshi users trade contracts on the outcomes of games among themselves. First known as a hub for betting on elections, the start-up has made a play for football fans this fall, as The Wall Street Journal reported, building on a March Madness campaign in the spring.
Investors seem to view Kalshi and its ilk as genuine competition for DraftKings and FanDuel. DraftKings and Flutter were each off 11% Tuesday. Both stocks were on track for their worst day since 2022 and their lowest closing prices since June, according to Dow Jones Market Data.
Differences in how the companies are regulated could give prediction-market start-ups an upper hand.
Sports betting is illegal in several states, including California and Texas, and it is taxed and regulated in states where it is permitted. Kalshi, however, is registered as an exchange by the Commodity Futures Trading Commission. Its event contracts are traded nationwide.
FanDuel launched its own market for event-based contracts in August, but it doesn't allow trading on sports at this point.
Prediction markets have come under scrutiny in recent years from state regulators and the CFTC itself, but the Trump administration appears to be more welcoming to them. Mansour, the Kalshi CEO, appeared Monday with other brokerage, cryptocurrency, and derivatives executives on a panel hosted by the CFTC and the Securities and Exchange Commission.
President Donald Trump's son, Donald Trump Jr., joined Kalshi as a strategic adviser in January. Trump Jr. is also an adviser to the rival company Polymarket, in which his venture-capital firm recently invested.
Write to Nate Wolf at nate.wolf@barrons.com
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September 30, 2025 15:12 ET (19:12 GMT)
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