FanDuel Leans Into Prediction Markets In Earnings Call As States Stall on Sports Betting Legalization

By Bill Speros

Feb 27th, 2026 11:14 AM EST

Sportsbooks aren’t just booking bets anymore — they’re booking risk.

As prediction markets gain traction, operators like FanDuel are walking a billion-dollar tightrope between state-regulated sportsbooks and CFTC-regulated event contracts. The latest earnings call of FanDuel's parent company made one thing clear: FanDuel isn’t backing away from the prediction market experiment — it’s doubling down.

A small glimmer of optimism emerged in the otherwise dismal Q4 2025 earnings report from Flutter, which touted positive early traction for FanDuel Predicts. The prediction market — powered by CME under the FanDuel label — launched in December and quickly filled the void in states like Texas and California, where traditional sports betting remains illegal.

FanDuel CEO Peter Jackson reiterated the company’s belief that prediction markets can serve as a leverage point to push more states toward legalization:

We believe that prediction markets will accelerate state regulation of online sports betting and iGaming. This, in our view, is the most valuable long-term opportunity in the U.S.

No states legalized sports betting in 2025. And so far, those hopes have not materialized in the current legislative season. Sports betting in California remains effectively DOA. Texas lawmakers only meet in odd-numbered years, and Lt. Gov. Dan Patrick — who controls the state Senate — has made clear he won’t allow a vote to legalize gambling or sports betting without sufficient GOP support. In Georgia, legislators proposed a bill that would legalize sports betting through the state lottery, bypassing a referendum. It has yet to be assigned to committee, and crossover day is March 6.

RELATED: U.S. Gambling 2026 Legislation Updates: iGaming, Sports Betting & Casino

iGaming Outlook Brighter — For Now

The iGaming picture appears somewhat brighter. Two iGaming bills in Virginia cleared their respective legislative chambers this week. Legislation also remains viable in Massachusetts, New York, and Illinois.

Against that backdrop, Flutter used its Q4 earnings call to signal increased confidence in prediction markets.

“We now expect that our prediction markets investment will be towards the upper end of the previously guided range,” CFO Rob Coldrake said, citing what he called “the significant opportunity we believe exists to drive customer acquisition.”

That implies spending closer to $300 million.

Jackson framed the company’s entry into the murky prediction market space as a growth play — not merely a defensive maneuver to prevent customer leakage:

The opportunity across prediction markets is certainly far bigger than any potential cannibalization of our existing sports betting business.

Currently, FanDuel and CME operate FanDuel Predict on a revenue-share basis. Analysts pressed executives on whether Flutter plans to acquire its own Designated Contract Market (DCM). He didn't give a clear answer but did not rule out such a move.

Jackson also reiterated internal data showing prediction markets are not materially impacting the core sportsbook.

We don’t believe prediction markets are having a meaningful impact on our business.

He added that a "comprehensive review” by the company found “no evidence of material cannibalization of our existing business." That echoes a study by Citizens that found roughly 5% of prediction market traders ditched sportsbooks.

Casinos, States, Regulators Dig In

While FanDuel leans in, much of the traditional gaming industry is digging trenches.

This week, the American Gaming Association once again declared war on prediction markets in its 2025 annual report. President Bill Miller put it this way:

The fight against prediction markets is the defining moment for our industry.

PENN Entertainment CEO Jay Snowden distanced his company from prediction markets during his earnings call Thursday. Caesars leadership made similar comments last week. Snowden was blunt:

It really puts the PENN and the MGM and the Caesars of the world in a very awkward position. Those gaming licenses are the most valuable assets we have. We’re not going to put those at risk. When regulators say, ‘This is illegal gambling, don’t do it,’ we don’t do it.

Regulators in Arizona and Michigan have publicly warned operators that wading into prediction markets could jeopardize their licenses.

On Monday, the Massachusetts Gaming Commission enacted first-in-the-nation regulations on player limits. Commissioner Jordan Maynard used the moment to take a swipe at operators in the Commonwealth — including Fanatics, FanDuel, and DraftKings — that have entered the sports-event contract space elsewhere.

Not Just Cannibalization But Jurisdiction

The real battle isn’t just about cannibalization. It’s about jurisdiction.

As state regulators tighten their grip and the American Gaming Association escalates its rhetoric, the Commodity Futures Trading Commission is signaling it won’t sit quietly while states attempt to wall off federally regulated exchanges.

If FanDuel, DraftKings and Fanatics prove prediction markets can scale without siphoning sportsbook revenue, the pressure shifts squarely to lawmakers. States that refuse to legalize may not just lose tax revenue — they may lose relevance.

The tightrope isn’t just financial.

It’s federal versus state authority — and the balance is still shifting.

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