BREAKINGVIEWS-Bookies merit good odds in prediction-market duel

By Jennifer Johnson

LONDON, Jan 16 (Reuters Breakingviews) - Everyone relishes being right – especially when there’s money on the line. Prediction sites like Kalshi and Polymarket let users monetise their convictions through simple "yes" or "no" contracts that pay out for an accurate call. Investors in conventional sportsbooks, like FanDuel and DraftKings DKNG.O, view them as a threat. The danger seems exaggerated.

The numbers look scary at first glance for incumbent sports-gambling firms. The top five prediction markets saw weekly volumes grow from around $446 million in late June 2025 to almost $3.8 billion by the end of November, a report by crypto firms Dune and Keyrock found. The same analysts said that athletic-linked contracts accounted for 85% of the total on Kalshi in 2025. Activity on Polymarket was more varied, with politics and crypto at 34% and 18% respectively, but sports still led with 39%. So for all the hype about geopolitical markets, including whether the U.S. would remove Venezuela's president or whether the Iranian regime will fall, it's clear that basketball and football wagers are powering a large part of the new industry's growth.

In September, Kalshi encroached further onto sportsbooks' turf by introducing parlays: more complex multi-leg bets that can link several yes-no predictions into a single contract. The move contributed to a selloff in DraftKings and FanDuel owner Flutter Entertainment's stock. The duo are now down 19% and 32% respectively over six months.

The question is how big sports prediction markets could get, and whether they will oust DraftKings and FanDuel. Analysts’ projections suggest the pie may be big enough for all to thrive. For instance, Clear Street Research reckons prediction markets could bring in $14 billion of revenue by 2030. Around one-third of this total comes from the sale of data to corporate customers, like hedge funds or media outlets, implying less than $10 billion of revenue directly from players' wagers. Compare that number with Flutter's stated U.S. total addressable market of $63 billion, which refers to market wide gross gaming revenue including sports and other online gambling sources in 2030.

If correct, those numbers suggest that classic gambling firms and prediction markets can thrive side-by-side. It stands to reason, since a key engine of growth is shifting physical gambling onto phones and desktops. Online accounted for just 16% of the $170 billion in total American gross gambling revenue in 2024, Berenberg analysts reckon. That's partly a reflection of the immature market: the Supreme Court only eased federal restrictions on sports betting in 2018, allowing states to legalise wagers outside of casinos. So the main trend may be prediction markets and online sportsbooks together taking business away from offline gambling, rather than primarily competing with one another.

DraftKings and FanDuel also have the advantage of profitable or near-profitable core businesses, allowing them to fund and experiment with their own prediction-market products. Meanwhile Polymarket and Kalshi face legal uncertainty over their regulatory status. The upshot is that it's hard to see sports betting incumbents as the underdogs.

Follow Jennifer Johnson on Bluesky and LinkedIn.