Flutter bosses unfazed by prediction markets
“Unsurprisingly, prediction markets dominated the discussion,” J.P. Morgan analysts reported of their Global Gaming Expo meeting with Flutter Entertainment. The latter was represented by CEO Peter Jackson and Director of Investor Relations Paul Tymms.
There are two outcomes to the prediction-market debate, as Flutter sees it, one good and one great. The first is if prediction markets are legitimized to enter online sports betting. Jackson and Tymms believe Flutter had the experience and products that would enable it to dominate.
In the “great” scenario, more states legalize OSB and igaming. In either event, Flutter is preparing a fourth-quarter, stateside launch of its prediction-market product, via CME Group. Whether that offering will include sports wagers remains to be seen.
“FLTR has seen no discernible impact on its business from Kalshi/prediction markets, but does view Kalshi’s trading volume as both inflated/not comparable to OSB handle,” Morgan analysts reported.
Having run betting exchanges in Europe for more than 20 years, Flutter professed to be unfazed by the American challenge. It saw opportunity in the crisis, as US states would likely add OSB and/or igaming to protect their revenue bases.
Flutter expressed the hope for new prediction-market clarity with the nomination of a new Commodity Futures Trading Commission chair. Jackson and Tymms also believed that Native American tribes and states would be envious of their online prerogatives.
As Flutter subsidiary FanDuel did with daily fantasy sports, Jackson and Tymms hope to achieve first-mover status via a preemptive strike into prediction markets.
“While we think Flutter is waiting on some of the smoke to clear before deciding on whether the product will include sport event contracts, it also notes that launching a prediction markets product will allow it to build its database in states that have not yet legalized OSB,” Morgan analysts opined.
Skeptical of Kalshi’s handle claims, Flutter execs said they had not felt “any discernible impact” from it. They also suggested that much of Kalshi’s action was coming from large states that don’t have OSB, particularly California and Texas.
Flutter, Morgan boffins said, “believes it has a structural advantage vs. prediction market operators re: promotional deployment, as the most scaled operators with the highest margins are able to generate more leverage and better economics on promotional offerings.”
Jackson and Tymms voiced confidence in their FanDuel pricing models, saying that sports outcomes will inevitably revert to the mean. Unlike Rush Street Interactive, Flutter execs noted less rationality in the promotional area, saying that DraftKings and Fanatics were higher “on a structural basis” than ever before.
Flutter still awaits a decision from the United Kingdom on a new tax regimen, due 26 November. The company, analysts said, “is working closely with regulators in hopes of landing a favorable outcome.”
David McKee is an award-winning journalist who has three decades of experience covering the gaming industry.
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The Backstory
Setting the stage for a new kind of contest
The collision between federally regulated prediction markets and state-licensed sportsbooks is reshaping how operators, regulators and investors think about risk, compliance and growth. Flutter Entertainment, parent of FanDuel, has positioned itself to straddle both worlds as legal fights play out and market demand tests the boundaries of what counts as a wager. The company is signaling confidence that the legal fog will clear in ways that reward scale, balance sheets and a head start on product and data. That is why executives told analysts they are preparing a fourth-quarter U.S. launch of a prediction-market product with CME Group even as the scope — and whether sports events are included — remains contingent on regulators and courts.
Flutter’s leadership downplayed near-term disruption from upstarts and cast the uncertainty as an opening. In a meeting with analysts at Global Gaming Expo, CEO Peter Jackson and Investor Relations Director Paul Tymms framed two outcomes: prediction markets get greenlights as part of online sports betting or, in a “great” scenario for big operators, more states legalize OSB and igaming to protect tax bases. Either path plays to incumbents with national brands, proven pricing models and promotional leverage.
Flutter’s hedge with CME, and what it unlocks
Flutter’s partnership with CME, first disclosed Aug. 20, is a practical hedge: enter a federally supervised venue for event contracts while keeping optionality on sports. A Truist analysis called the move “predictable” given rising state taxes on sportsbooks and the traction of prediction platforms like Kalshi in states that bar wagering. The initial slate would mirror CME’s domain — daily closes for commodities, currencies and equity benchmarks — giving FanDuel the compliance and technical scaffolding to add sports contracts if regulators allow. Jefferies echoed the logic, noting the setup improves FanDuel’s speed to market while deferring financial sizing until rules and product fit come into focus.
The appeal is not just diversification. Flutter sees a data and customer acquisition play in states without legal OSB, similar to how FanDuel used daily fantasy sports to establish first-mover advantage. Executives told analysts they have seen no discernible impact from prediction markets to date and question headline trading volumes, especially where OSB is live. They also argue scale will matter if and when event contracts compete with sportsbooks, as deeper margins can subsidize promotions and pricing that smaller exchanges struggle to match.
Courts, Congress and the definition of a “swap”
The timing and contours of any sports-linked product depend on litigation that could stretch for a year. A legal briefing summarized by Jefferies highlighted a core question: Did Congress intend the Commodity Exchange Act and the Commodity Futures Trading Commission’s remit to cover sports outcomes as “swaps” with “potential commercial economic consequence,” as Kalshi argues? Early readings suggest federal courts are open to that interpretation, though conflicting statutes and prior rulings create room for states to press their case. The expert laid out three endgames — congressional clarification that excludes sports, a Supreme Court decision or alignment among lower courts — and advised incumbents to conserve capital until one arrives.
While the legal process plays out, prediction markets enjoy access to geographies that sportsbooks cannot touch. That asymmetry has generated headlines in California, Texas and across the Southeast and put incumbents in a bind. Aggressive moves risk antagonizing state partners and tribes whose support is critical for OSB expansion. The analysis noted that if sports events become legal swaps, DraftKings and Flutter could quickly compete on product and distribution; if they are prohibited, the status quo favors sportsbooks. Either way, uncertainty benefits Kalshi in the near term by extending its window to operate and market.
State pushback and the preemption fight
States are not waiting on federal courts. Regulators have begun asserting jurisdiction, casting the platforms as unlicensed gambling that threatens consumer protection, tax collection and integrity monitoring. The Michigan Gaming Control Board opened an investigation into prediction markets operating in the state, citing violations of age and KYC rules, AML controls and self-exclusion requirements. Michigan’s message is blunt: framing sports as investment products does not exempt platforms from state law, and allowing 18-year-olds access undercuts responsible gaming standards set for sportsbooks.
Kalshi has countered in court. In Maryland, the company sued the state’s lottery and gaming commission after a cease-and-desist order, arguing that its sports event contracts are peer-to-peer swaps regulated by the CFTC and preempt state oversight. The complaint leans on field and conflict preemption claims and follows a temporary injunction Kalshi won in Nevada. The Maryland case underscores a broader strategy: push the federal framework to the fore, resist geofencing demands that complicate the preemption argument and keep the door open to the nation’s largest OSB holdouts.
Competitive realities beyond the courtroom
While prediction markets draw outsized attention, operators are managing day-to-day competitive and regulatory pressures that will shape their ability to pounce if rules break their way. Flutter executives told analysts they are confident in FanDuel’s pricing and expect outcomes to revert to the mean, but they also flagged less rational promotional behavior among rivals, with DraftKings and Fanatics spending high on a structural basis. If prediction markets and sportsbooks converge, promotion-heavy dynamics could migrate, favoring players with superior margins and scale.
Content access, long a bargaining chip in customer acquisition, remains resilient. The industry’s reaction to the high-profile shutdown of illegal streamer Streameast was instructive. Analysts said the takedown, despite the site’s massive audience, is unlikely to move betting handle. Licensed books already bundle streams or data feeds through official partnerships. For leaders like FanDuel and Bet365, the incident reinforces that distribution advantages are embedded and independent of piracy disruptions. That stability matters as operators test crossovers like event contracts, where the value proposition depends as much on trusted payments, identity controls and in-app experiences as it does on novel markets.
There are other near-term variables. Flutter awaits a U.K. tax decision due Nov. 26, a reminder that product expansion is only one lever in a complex regulatory mosaic. At home, the company is also betting that a new CFTC chair could bring clarity on event-based contracts. If federal guidance lands and states broaden OSB or igaming, FanDuel’s footprint gives it a running start. If not, the CME tie-up still offers diversification and a customer funnel in non-OSB states without crossing red lines that could unsettle state partners or tribal stakeholders.
The stakes if the switch flips
If the courts or Congress bless sports as eligible event contracts, the market could shift quickly. Truist argued that FanDuel- or DraftKings-branded contracts could jump to the forefront given distribution and trust, even if the products are inferior to traditional betting for many users today. Jefferies’ view was similar: the partnership gives FanDuel the regulatory and technical plumbing to move fast when permitted. Flutter’s own playbook suggests it would seek first-mover advantage, build databases in closed states and lean on scale to compete on promotions and pricing.
If the switch never flips, sportsbooks still win by default. The legal expert advising investors noted that a definitive answer either way returns momentum to incumbents. In the meantime, Flutter’s message to investors is patience. The company sees little immediate impact from prediction markets on its core business, views upstart volume claims skeptically and is preparing for multiple outcomes without overcommitting capital. In a fragmented regulatory environment, that optionality may be the most valuable position of all.
