Adam Roarty is a journalist covering sports betting, regulation, and industry innovation for CasinoBeats. His coverage includes tax increases in the UK, covering breaking stories in the ever-evolving landscape of US betting such as the...
Read Full BioThe two leading sportsbooks in the US are betting on prediction markets. Both FanDuel and DraftKings have announced plans to launch prediction market platforms by the end of the year.
States have made no secret of their opposition to the controversial markets, and as a result, the two companies have withdrawn their sports betting license applications from Nevada.
We look at whether the gamble is likely to pay off in the long run for the companies. First off, it’s worth noting that Nevada is a relatively small market, particularly for online sports betting.
The majority of gambling in the state is done at casinos. Sports bettors must register at a casino to be able to bet online, and even then, a lot of the wagering is done at long-established retail sportsbooks.
The American Gaming Association (AGA) noted, “Unlike in various other states where online sports betting accounts for 95 percent or more of revenue, mobile sports wagering accounted for just 59 percent of Nevada’s total sports betting revenue in 2024.”
Revenue for all online sportsbooks last year was $285.8 million in the state. Compare that to New York, where FanDuel and DraftKings handled $17 billion of the $20 billion in bets placed last year, generating over $1.6 billion in revenue.
Vegas No Place For New Sportsbooks
DraftKings and FanDuel have never made inroads into Nevada. DraftKings applied for a license in 2021 to prepare for a potential sportsbook launch, but never went live.
It also abandoned its investment in the Vegas Sports Information Network (VSiN). In 2021, at the same time it applied for a betting license, it paid $70 million for the broadcasting network, only to sell it three years later. Eilers & Krejcik Gaming analyst Chris Krafcik, writing in the advisory firm’s EKG Line newsletter, suggested the price was “likely as low as $1.”
FanDuel was licensed in Nevada as a partner with Boyd Gaming in 2023 when the company rebranded its sportsbook at the Fremont Hotel and Casino as a FanDuel location, although Boyd managed the operation.
In July, Boyd sold its 5% stake in FanDuel back to the company for $1.76 billion. The company is also severing its ties with FanDuel at 15 of its regional casinos in eight states.
FanDuel spokesman Alex Pitcocchelli said, “Our views of the current opportunity for prediction markets outside of regulated states are unfortunately in direct opposition to Nevada’s priorities for its licensed operators. As a result, we are making the difficult decision to voluntarily surrender our license.”
Prediction Markets Offer Access to Major States
Having never really established a foothold in Nevada’s casino-dominated betting market, the decision to withdraw does not seem overly difficult, given the potential markets that are opening up.
DraftKings CEO Jason Robins expects the gamble to pay off. When announcing that DraftKings Predictions aims to launch by the end of the year, Robins noted the size of the potential market, stating, “Nearly half the country’s population remains without access to legal online sports betting, but there are several other companies offering federally regulated Predictions in all 50 states.”
Those states include California, where DraftKings has splurged millions in attempts to push through legalization. Lobby groups reportedly spent $450 million on efforts to pass Proposition 27 in 2022, which ultimately failed. In Missouri, DraftKings also spent millions, albeit with better success, as legal sports betting in the state is set to launch next month.
The company established its own PAC earlier this year in an effort to advocate for further legalization and oppose tax increases. In the meantime, prediction markets have found a legal loophole to circumvent years of spending and campaigning.
Kalshi has traded billions of dollars since the NFL season began and expects that figure to continue rising as more users become aware that they can now wager on sports in all 50 states, as the company often advertises. A favorable ruling in California this week further cemented the platform’s presence in the country’s most populous state.
Legalization Could Be on Horizon
Robins said the spread of prediction markets could also lead to legalization. He stated, “As growth in Predictions continues, this may also motivate more states to legalize online sports betting and iGaming with reasonable regulation and taxation.”
In its press release announcing FanDuel Predicts will launch next month, the company said, “As new states legalize online sports betting, FanDuel will cease offering sports event contracts in those states.”
Either through prediction markets or legalization, there is a genuine opportunity to finally offer sports betting in California, Texas, Florida, and other states that have so far been unreachable. If that means sacrificing Nevada for the time being, then the gamble seems worthwhile.
Will Other States Follow Nevada’s Precedent?
The danger is that other states will follow Nevada’s example. In addition to the NGCB sending a warning to licensees about entering prediction markets, four other states – Arizona, Ohio, Michigan, and Illinois – sent similar threats.
These states, except for Michigan, have also sent cease-and-desist letters to the prediction market platform Kalshi, in addition to Maryland, New Jersey, Montana, and, most recently, New York.
New York has been putting additional pressure on prediction markets. Assemblyman Clyde Vance introduced a bill this week that proposes explicitly banning sports event contracts.
Lawyer Stephen Piepgrass told CasinoBeats that he expects the legal status of prediction markets to remain gray for the next few years. Truth Social and Google are both integrating their platforms with marketplaces. As legal debates continue, the markets could become so ingrained in the culture that it will be almost impossible to roll back.
DraftKings, FanDuel, investors, and many others are banking on that, and they may well be right.
