FanDuel readying prediction market launch in states without legal sports betting
Summary
FanDuel (via parent Flutter) will launch a prediction market product, FanDuel Predicts, next month, enabling trading on sports event contracts in US states that have not legalised sports wagering. The announcement on a Q3 earnings call by Flutter CEO Peter Jackson came alongside a regulatory reaction in Nevada, where FanDuel agreed to surrender its gaming licence amid the move.
FanDuel aims to target large untapped populations — Jackson flagged California and Texas as priorities — and expects prediction markets to open access to roughly half the US market that sportsbooks cannot currently serve. The company has partnered with the CME Group on the offering; under the deal CME will take about half of gross revenue and handle exchange-related costs, while FanDuel will run the app and absorb its costs.
Financially, Flutter reported a small revenue decline for the quarter but stronger-than-expected adjusted EPS. The group is budgeting incremental EBITDA costs of $40m–$50m in Q4 for the prediction-market launch, with $200m–$300m earmarked for investment across 2026. Flutter lowered full-year 2025 revenue and EBITDA guidance amid the added spend and unfavourable early NFL outcomes.
Key Points
- FanDuel Predicts will roll out next month and offer sports event contracts in states without legal sports betting (around 11 states).
- Nevada regulators prompted FanDuel to surrender its gaming licence as FanDuel moves into prediction markets.
- FanDuel expects prediction markets to reach previously untapped populations, emphasising California and Texas as key targets.
- Flutter reported Q3 revenue of $3.79bn (down 5% year-on-year) but delivered adjusted EPS of $1.64, beating estimates.
- FanDuel retains ~38% US sportsbook market share by gross gaming revenue and ~41% by net gaming revenue.
- Initial prediction-market costs are estimated at $40m–$50m in Q4, with $200m–$300m planned investment for 2026.
- The CME Group partnership gives CME 50% of gross revenue from FanDuel Predicts, while FanDuel covers app costs and CME handles exchange costs.
- Flutter lowered full-year 2025 revenue and EBITDA guidance; its share price fell notably in pre-market trading following the update.
Context and Relevance
This is a material strategic shift for major US-facing sportsbook operators: prediction markets let firms reach users in states where traditional wagering remains illegal, changing the addressable market dynamic. The move has immediate regulatory consequences (Nevada licence surrender) and significant commercial implications — new revenue streams, large upfront investment and partnership economics with established exchanges such as CME.
For investors and industry participants, the story ties together market-share dynamics, guidance changes and capital allocation decisions at Flutter (FanDuel). For regulators and policy watchers, it raises questions about how prediction contracts will be treated relative to conventional sports betting and whether more states will change position or introduce new rules.
Why should I read this?
Short version: FanDuel is about to open a brand-new way to sell sports outcomes to millions in states where betting isn’t legal — and regulators have already started pushing back. If you follow US gambling markets, regulation, or who’s winning market share, this matters. It could reshape where and how operators make money over the next few years.
