FanDuel recently joined the expanding number of gaming stakeholders concerned about the growth of prediction markets.
Its parent company, Flutter Entertainment, included sports event trading as derivatives products the federal Commodity Futures Trading Commission (CFTC) regulated among its business risk factors in recent financial disclosure forms. FanDuel, the No. 1 regulated U.S. online casino gaming and sportsbook operator by market share, said prediction markets such as Kalshi and Polymarket create “new competition.”
“While we believe that we are well positioned to compete with new entrants to the betting and gaming market through our online betting and gaming offerings, the competitive dynamic is evolving and we cannot assure you that our results of operations will not be adversely impacted by the expansion of legalized online gaming and betting,” the company wrote in its annual 10-K form filed with the US Securities and Exchange Commission Tuesday.
The 10-K report lists more than a dozen wide-ranging macro-level risks the company faces, including new regulations, increased taxes, decreased customer participation and shifting perceptions toward gambling. Including prediction markets underscores the potential challenge the regulated gambling industry faces from these offerings.
Growing industry opposition
FanDuel's report comes as industry advocacy groups, regulators and members of Congress are increasingly scrutinizing prediction markets.
Nevada took similar action against FanDuel more than a decade ago when it argued the company’s daily fantasy sports products were a form of gambling. FanDuel and rival DFS-innovator DraftKings don’t offer daily fantasy contests in the state.
NEW: Nevada Gaming Control Board issues a cease-and-desist order to KalshiEx for engaging in unlawful gaming, i.e., “event-based contracts” on sporting events and election outcomes “unlawful in Nevada unless and until approved as licensed gaming by the Nevada Gaming Commission.” pic.twitter.com/hIf3uLllqP
— Daniel Wallach (@WALLACHLEGAL) March 5, 2025
Other states could proceed with similar letters which, if not followed, could lead to lawsuits to determine their legality. It could also cause Congress to take further long-term action.
Nevada Rep. Dina Titus, whose district includes much of the Las Vegas Strip, wrote to the CFTC her concerns about sports betting contracts days before the Gaming Commission issued its cease-and-desist letter. She stated it was a “backdoor way” to allow sports betting in all 50 states without following proper regulations and consumer protections.
31 states, along with Washington D.C. and Puerto Rico, approved single-game mobile sports betting, while eight more allow in-person wagers. Regulators in each state license and tax every sportsbook provider, which are also subject to federal laws and levies.
The CFTC is expected to hold a “roundtable discussion” about sports event contracts later this month.
Nevada officials' actions come as nationwide gaming organizations also stepped up opposition to prediction markets.
The Indian Gaming Association led a group of 10 tribal gaming organizations that last month asked the CFTC to prohibit these contracts, arguing they violate state and federal law. The American Gaming Association, the industry’s most prominent trade group for commercial gaming interests, also asked the CFTC for more clarity around what it considered a “problematic” industry.
Event contract background
Prediction markets including Kalshi, Polymarket, PredictIt and others gained national prominence with high-profile marketing about placing “contracts” on the 2024 U.S. presidential election's outcome. The companies advertised heavily, including digital Kalshi billboards on the Vegas Strip featuring live betting odds on the two candidates.
Leading cryptocurrency exchanges including Robinhood and Crypto.com also launched prediction-style markets. Along with political and current event odds, these sites offer contracts on the weather, pop culture figures and a wide range of other outcomes.
Many of these sites offered contracts on the Super Bowl, drawing tens of millions of dollars in money placed for predictions on the game, perennially the most wagered-upon sporting event in the U.S.
Instead of traditional sportsbook-style bets selecting one of the two competing teams, prediction markets assign probabilities and let users buy “contracts” on the outcome at shifting values. Ahead of Thursday’s NHL regular season game between the Buffalo Sabres and Tampa Bay Lightning, Polymarket allowed users to acquire “shares” on the Lightning at 69 cents a share; should the Lightning win, customers with those contracts would receive $144 for a $100 share.
As of Thursday afternoon, there were shares for every one of the evening’s NHL games as well as offerings on dozens of other U.S. and international sports leagues and events.
These prediction markets have argued for their legality in similar ways the original DFS sites fought a decade ago and the new wave of individual player proposition sites such as Underdog Fantasy have in recent years. FanDuel maintained in its recent 10-K form daily fantasy sports contests are a game of skill and therefore not under gambling regulators' purview.
The Trump Administration, including Trump-appointed acting CFTC Chair Caroline Pham, seems far more inclined to permit these markets than the previous the Biden Administration with its more critical approach. Donald Trump also vocally supported cryptocurrency stakeholders during his 2024 presidential run and Donald Trump Jr. is a formal Kalshi adviser.
Prediction markets' prominence around the election and Super Bowl, as well as a wide-ranging ability to “predict” political events and other occurrences not permitted by sportsbook laws, is set to draw increasing scrutiny from regulators and lawmakers both before and long after the CFTC roundtable.
