DraftKings Is All-In on Prediction Markets, FanDuel Is Playing a Different Game
Two Q2 earnings reports landed this week from the top US sportsbook operators. Both DraftKings and FanDuel have prediction market products.
And both are entering the always-coveted NFL season with those products as a strategic priority. Beyond that, the two approaches diverge sharply, and the divergence says something meaningful about how the two dominant US sportsbook operators view the same emerging category.
DraftKings is treating prediction markets as a category to win, and they’re going after that win with everything they have. FanDuel is treating prediction markets as a distribution tool and as a product that sits adjacent to its sportsbooks. That’s a major distinction for two competitors who have been trying to win at the same game for the last decade.
DraftKings Approach: Win the Prediction Market Category
DraftKings CEO Jason Robins framed prediction markets in his earnings quote with unmistakable intent: “Predictions is already growing faster than we anticipated. The similarity of Predictions customer metrics to Sportsbook customer metrics, our advantaged LTV position, and our playbook to innovate on a leading Predictions offering all underpin our confidence that we can win the category this NFL season and beyond.”
Winning the category is the key phrase. Not participating in it, not monetizing it as a complement to the core product.
DraftKings introduced a new metric called Sports Consumer Volume, combining sportsbook handle and prediction market volume into a single number. Q2 Sports Consumer Volume was $13.1 billion, up 15% year over year. By collapsing the two products into one metric, DraftKings is signaling that it views them as one business. The company is investing $200 to $300 million to build out the Predictions offering, funded by approximately $1 billion in core sportsbook EBITDA. It can afford the bet, and it is making it deliberately.
DraftKings moved from CME to Crypto.com as its exchange partner for sports prediction markets, citing an expanded catalog and faster product deployment. Robins noted that on Super Bowl Sunday, the DraftKings Predictions app had the second-most downloads in its category and delivered three times its prior daily trading record. The product is clearly gaining traction, and the company will continue to accelerate into it.
The underlying Q2 financials were mixed. Revenue fell 5% year over year. Net loss was $67.6 million, against a $157.9 million profit in the same period last year. The hold rate dropped to 6.8% from 8.7%. The Knicks’ NBA championship win was a big hit to DraftKings. The World Cup mostly produced customer-friendly outcomes as well. Robins did not treat any of this as a structural concern. He reiterated full-year guidance and pointed to prediction market momentum as evidence the second half would deliver.
FanDuel: A Complementary Product, Not Central
Flutter’s report told a different story from its main competitor’s. The company cut full-year 2026 revenue guidance by $395 million and adjusted EBITDA guidance by $210 million, blaming a one-week NFL schedule delay and a deliberate increase in US promotional generosity to roughly 6% of handle. Flutter stock closed down more than 11% on the day. CEO Peter Jackson announced he would step down after nine years, with Dan Taylor taking over on October 1.
Jackson’s framing of prediction markets throughout the earnings call was careful. FanDuel Predicts allows the company to acquire customers ahead of sports betting regulation in new states. It delivers incremental economics in the meantime. Flutter expects its market-making operation to generate approximately $50 million in revenue in 2026, against category expenses expected to top $200 million.
The gap in that math, $50 million in and $200 million out, reflects a company that views prediction markets as a customer acquisition channel rather than a standalone business. Flutter described cannibalization as low single digits and framed prediction markets as incremental TAM. That is the language of a complement, not an all-in category play.
FanDuel is moving all sports and novelty contracts from CME to Crypto.com while CME retains financial markets. The stated reason is product speed and catalog breadth. CME’s actual sports volume during the first two weeks of July was reportedly 0.02% of all volume from US regulated entities. That figure makes the swap self-explanatory. FanDuel is cutting CME loose from sports because CME’s sports prediction market operation has not generated meaningful volume.
Susquehanna analyst Joe Stauff estimated FanDuel is roughly 9 to 12 months behind DraftKings in building out its prediction markets offering. FanDuel has no plans to operate its own exchange. It will market-make on other platforms and integrate a unified app before the NFL season.
Exchange Partnership vs. Building a Licensed Market in the US
In deciding to partner rather than build an exchange market, Flutter has some irony it has not addressed publicly. FanDuel’s parent already operates Betfair, one of the world’s largest betting exchanges. Betfair is the peer-to-peer model applied to sports wagering at global scale. Flutter built its international empire partly on the exchange format. And yet in the US, FanDuel Predicts has no plans to operate its own prediction market exchange, preferring instead to route through Crypto.com as a distribution partner.
The explanation is probably jurisdictional and structural. Betfair operates under UK gambling licenses in a mature regulatory environment. Building a CFTC-licensed designated contract market in the US is a different and more demanding undertaking. Still, the contrast between Flutter’s exchange expertise internationally and its partner-dependent approach domestically is one of the more curious strategic gaps in this earnings cycle.
The NFL Season Will Unearth Plenty of Answers
Both companies are entering the NFL season with prediction market products, meaningful investment, and contrasting strategies. DraftKings has made it clear that the strategy is to win the category. FanDuel wants to participate in it profitably.
The NFL season is the first real test at scale for both. Robins said the NFL season specifically because the similarity between prediction market and sportsbook customer metrics means the same marketing machine that drives sportsbook growth should work for Predictions. If he is right, DraftKings may consolidate its lead. Flutter is increasing sportsbook promotional spend to 6% of handle in H2, signaling it intends to fight for sportsbook customers aggressively while prediction markets develop in parallel.
The prediction markets fight within the US sportsbook industry is now a two-strategy war. One operator is betting it can outcompete Kalshi and Polymarket directly. The other is betting there is a profitable role for a market-maker and distributor without owning the exchange. Fall 2026 will produce the first serious evidence on which bet was right.
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