FanDuel Is Going All In on Prediction Markets

FanDuel isn’t testing prediction markets on the side. It’s committing real money.

Its parent company, Flutter Entertainment, said this week it’s prepared to invest heavily in its prediction market platform in 2026, potentially up to $300 million. That kind of spending isn’t minor experimentation. It signals that FanDuel sees prediction markets as more than a passing trend.

There’s a cost attached. Flutter projects significant adjusted EBITDA losses tied to the effort this year. But executives framed that number differently on their earnings call. If spending reaches the higher end, they suggested, it would mean the product is gaining traction.

In other words, they’d rather spend aggressively now than risk falling behind.

Why Prediction Markets Are Forcing the Issue

Prediction markets exploded into mainstream sports conversation around last year’s Super Bowl. Since then, sports-related contracts have generated billions in trading volume. Unlike traditional sportsbooks, these platforms operate under federal oversight rather than state-by-state gaming regulation, a distinction that’s triggered legal challenges in multiple states.

For established sportsbook operators, this created a dilemma.

Ignore the space and risk losing users? Or enter it while the regulatory picture remains unsettled?

FanDuel, DraftKings, and Fanatics all chose to launch prediction platforms late last year. The timing wasn’t accidental. It reflected growing concern that prediction markets weren’t going away.

Interestingly, executives have been careful not to overstate the current threat. FanDuel described the impact on sportsbook handle as “low single digit.” DraftKings said something similar earlier this month. In Missouri, one of the newest regulated sports betting states, FanDuel reported a strong launch and solid customer acquisition.

But investor reaction suggests the concern runs deeper than a short-term handle.

Shares tied to major sportsbook operators have fallen sharply over the past year. Slower growth, rising competition, and legal uncertainty around prediction markets have all weighed on valuations. Even if today’s financial impact looks small, shareholders are trying to price in tomorrow’s risk.

Growth Pressure and Strategic Positioning

At the same time, prediction markets are gaining visibility, and traditional sportsbook growth has cooled. FanDuel recently posted roughly 3% handle growth, lower than some analysts expected. Executives pointed to a less compelling NFL schedule late in the season and adjustments to promotional spending after bettor, friendly results.

Those explanations may be fair. But markets tend to focus on direction, not excuses.

Flutter leadership has leaned on its experience running exchange-style platforms overseas, particularly Betfair in Europe. That background could matter if prediction markets evolve into a permanent feature of U.S. sports wagering. Operating an exchange requires different technology, liquidity management, and pricing expertise than running a traditional book.

The bigger question is whether prediction markets become a parallel ecosystem or remain a niche product alongside sportsbooks. FanDuel’s strategy suggests it doesn’t want to wait for clarity. Instead, it’s building now, absorbing short-term losses, and positioning itself for multiple possible outcomes.

Prediction markets still face legal challenges. Regulatory decisions could reshape the landscape quickly. But sitting still carries its own risk. FanDuel seems to be betting that getting in early matters more than waiting for perfect clarity. Whether that proves visionary or simply defensive will depend on how prediction markets develop over the next few years.

For now, though, one thing is clear. FanDuel isn’t treating this like a side project. It’s treating it like the next battleground.