FanDuel joins prediction market as Flutter expands betting

FanDuel is the latest to get on the prediction market bandwagon with a new app that aims at the states where online gambling is not legal

ContentsFanDuel Predicts expands into new U.S. statesCollaboration with CME Group determines strategyMarket reaction and regulatory risksThe shift indicates increasing competition between the old sportsbooks and new prediction sites. FanDuel is the latest to be on the prediction market bandwagon, following the introduction of FanDuel Predicts by its parent Flutter Entertainment, in five states in the United States

The application enables its users to trade event outcomes on federally regulated prediction markets. The launch follows a similar product by DraftKings in most parts of the country.

The introduction is an indication of mounting pressure on the incumbent sportsbooks to act against the rapid development of prediction market startups

The Kalshi and Polymarket companies have attracted attention by providing event-based contracts that are regulated by the federal government. Their growth has caused the licensed gambling operators to be concerned about the loss of users.

FanDuel Predicts expands into new U.S. states

FanDuel Predicts has been operational in Alabama, Alaska, South Carolina, North Dakota, and South Dakota. The existing laws in these states do not allow betting on sports online. Prediction markets are regulated by the Commodity Futures Trading Commission, and this enables greater geographic penetration.

The platform allows users to trade on the results of sporting events, cultural events, and financial indicators. FanDuel indicated that the small opening will assist in gauging user behaviour and the performance of the products. The company intends to increase its presence all around the country in 2026.

James Cooper, the senior vice president of FanDuel, indicated that it will be the basis of future development. He observed that feedback at an earlier stage will influence the platform before it is spread more widely. FanDuel will focus on balancing both innovation and regulation in the process of expansion.

Collaboration with CME Group determines strategy

FanDuel has collaborated with CME Group to uphold the regulation process behind its prediction markets provision. The CME Group offers the exchange platform required to list and clear event contracts in a legal manner. This is the same short-term strategy of DraftKings.

DraftKings has reported that it will ultimately pass trades through an exchange that it owns. FanDuel has not indicated that it is going to construct or purchase its own derivatives venue. It will instead turn to CME Group as it rolls out the product.

FanDuel anticipates providing contracts based on economic data, commodities, and stock indexes of stocks across the country. The contracts of sports will also be confined to the states that do not have legal sports betting online. This restriction can be attributed to the continued regulatory prudence.

Market reaction and regulatory risks

The prediction markets have influenced investor attitudes towards large sportsbooks. During the period between August and November, DraftKings and Flutter stocks fell due to competition issues. Concerns among investors were that startups would reduce market share.

Since the announcement of FanDuel Predicts, Flutter has recovered in its stock. Following the news of the launch, shares increased by up to 1.7%. The recovery is indicative of trust in the strategy of the business.

A number of state regulators have sent warnings regarding sports-related prediction markets. The officials have warned that license holders might be punished in some jurisdictions. These are some of the risks that still play a major role in the way FanDuel goes.

The move that FanDuel made into prediction markets is an indication of a strategy to address the changing trends of betting. The company is trying to regulate alternatives as it maneuvers through complicated state and federal regulations.