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The parent company of sports betting platform FanDuel is partnering with derivatives exchange CME Group to launch a prediction markets platform, allowing it to bypass restrictions in US states where gambling is illegal.
Flutter, which is headquartered and listed in New York, said it would launch a standalone unit in December called FanDuel Predicts that would offer wagering on contracts across baseball, basketball, American football and hockey, as the world’s largest online gambling group seeks to capitalise on the explosion in US prediction market betting.
Because the contracts are structured as peer-to-peer trades, prediction market providers are regulated derivatives platforms rather than betting groups, allowing them to bypass sports gambling bans in certain states. Both California and Texas, the two most populous states, prohibit sports betting.
Flutter’s chief executive Peter Jackson said the new platform offered “an exciting incremental opportunity” to sell “to the half of Americans who cannot currently access our sports betting products”.
The push into prediction markets comes as Flutter lowered its full-year guidance after favourable outcomes for gamblers in the three months to the end of September hit earnings. It is now forecasting full-year revenues of $16.7bn, down from previous guidance of $17.3bn.
Flutter’s big sports betting rival, Boston-based DraftKings, also lowered its guidance this month. Shares in both companies have been hit by fears that the rising prevalence of prediction markets will eat into their dominance of the $14bn US sports betting sector.
Rather than offer its own fixed-odds or point spreads like a traditional sportsbook, prediction markets offer shares in binary outcomes, such as a certain team winning or losing a football match. Prices, which shape implied odds, fluctuate as participants trade these shares, while operators typically make their money through transaction fees.
Polymarket and Kalshi, the world’s two-largest prediction markets, both saw a strong uptick in trading after they successfully tipped Donald Trump as the favourite in last year’s US presidential election. The president’s eldest son, Donald Trump Jr, is a strategic adviser to Kalshi and an investor in Polymarket.
Both companies started out primarily as platforms for political election wagers, but are rapidly evolving into sports gambling behemoths. Sports volumes on Kalshi are approaching $1bn a week, according to market data analysis by the Financial Times.
In a statement, CME Group chief executive Terry Duffy said: “Our new event contracts on benchmarks, economic indicators and now sports will appeal to a new generation of potential participants who are not active in these markets today.”
In a letter to shareholders, Jackson said the push into prediction markets offered “an immediate growth opportunity” by allowing Flutter to offer a “compelling sports product [ . . . ] in states that do not currently have access to sports betting”.
Flutter will only offer prediction trading on sports in states where online sports betting is illegal. It will offer nationwide access to prediction trading on other non-sport contracts, such as stock market benchmarks, commodity prices, cryptocurrencies and economic indicators.
Jackson dismissed fears that existing bettors would move to prediction markets, insisting that customers “continue to prefer the richer experience provided by regulated sportsbooks”.
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