FanDuel has entered the emerging US prediction market sector, launching a new platform days after rival DraftKings made a far broader debut in the space. The move underscores both the growing interest among major sportsbooks in event-based contracts and the legal and regulatory uncertainty that continues to shape the market’s early development.

The new platform, FanDuel Predicts, went live on Monday in five states: Alabama, Alaska, South Carolina, North Dakota and South Dakota. The rollout is notably smaller than that of DraftKings, which introduced its prediction market offering in 38 states on 19 December. FanDuel said it plans to expand into additional states early next year, though it did not specify which jurisdictions will be next.

FanDuel launched the platform in partnership with CME Group, one of the world’s largest derivatives marketplaces. According to a joint press release, FanDuel Predicts will be available through the Apple App Store and Google Play, and will use FanDuel’s existing Know Your Customer procedures. Customers will be required to provide personal and financial information, including a Social Security number and government-issued identification. “This launch reflects the disciplined work of teams across the company, from product and technology to legal and operations,” FanDuel chief executive Amy Howe said in a LinkedIn post announcing the launch.

A cautious entry into a contested market

FanDuel’s limited initial footprint contrasts sharply with the aggressive expansion strategy adopted by DraftKings and Fanatics, both of which now allow customers in large states such as California, Texas and Florida to participate in prediction markets. Those three states are the most populous in the US and remain among the most commercially attractive for digital wagering products.

Industry analysts view the divergent launch strategies as a reflection of unresolved legal questions surrounding sports-related event contracts. Barry Jonas, an analyst at Truist Securities, said following DraftKings’ launch that a prolonged legal battle over the permissibility of sports event contracts could ultimately reach the US Supreme Court.

In one scenario outlined by Jonas, if sports event contracts survive federal legal challenges, FanDuel and DraftKings would be well positioned to dominate the prediction market sector, leveraging their existing customer bases and technology platforms. Such an outcome could also accelerate the legalisation of online sports betting in additional states.

Conversely, Jonas warned that a blanket prohibition on sports event contracts would likely push both companies back toward their core online sports betting strategies, where they already operate in an effective oligopoly. He also noted that companies without traditional sportsbook operations — such as Kalshi, Robinhood and Coinbase — could gain ground in states where the legal status of event contracts remains unclear.

Despite these risks, Jonas believes FanDuel and DraftKings are still positioned to outperform competitors in the near term. Jordan Bender, an analyst at Citizens JMP Securities, previously told iGB that long-term success in prediction markets is likely to hinge on superior product design and technology rather than sheer geographic reach.

Product scope and financial implications

FanDuel said its prediction market platform will offer contracts tied to financial benchmarks such as the S&P 500 and Nasdaq-100, commodities including oil, gas and gold, cryptocurrencies, and major economic indicators. Sports-related event contracts will also be available for baseball, basketball, football and hockey in states where online sports betting is not legal, excluding tribal lands.

The company added that as states legalise online sports betting, FanDuel Predicts will stop offering sports event contracts in those jurisdictions, a move aimed at aligning the platform with evolving regulatory frameworks. The broader prediction market sector is expanding rapidly. Gaming consultancy Eilers & Krejcik has estimated that annual trading volume across prediction markets could reach $1 trillion by the end of the decade.

Under the terms of the partnership, CME Group will receive 50% of gross revenue generated by FanDuel Predicts, while FanDuel will cover all costs associated with operating and supporting the app. Flutter Entertainment, FanDuel’s parent company, expects incremental fourth-quarter EBITDA costs of between $40 million and $50 million related to the launch. CME Group will be responsible for exchange-related expenses.

 

This launch reflects the disciplined work of teams across the company, from product and technology to legal and operations.

The Future

“CME Group prediction markets will enable a new generation of users to express their views on global benchmarks, economic indicators, sports and more,” said Lynne Fitzpatrick, CME Group’s president and chief financial officer. “This launch is a pivotal step for expanding the reach of our products to FanDuel’s millions of registered users across the US.”

Flutter Entertainment shares were trading at around $218 on Tuesday, down nearly 3% on the day and roughly 15% lower year-to-date, reflecting broader investor caution as the company invests in new and still legally contested market segments.