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U.S. sports-betting giants FanDuel and DraftKings remain coy about their plans to enter the prediction market space, even as they keep a watchful eye on regulatory developments.
Flutter Entertainment CEO Peter Jackson and DraftKings boss Jason Robins both spoke about prediction markets in calls with Wall Street analysts last week, and while neither broke much news regarding their future involvement, they did speak to the impact that the rapid expansion of sports-event contracts is having on the regulated sports-betting industry.
“We would like to get as much certainty as we can about these prediction markets; we're not the only people who are saying that,” Jackson said during a fireside chat hosted by analysts from Barclays.
“I think we should expect that the prediction markets in one form or another are going to continue, and I think that there are some puts and takes around that, but I think overall, that's a net positive.”
Jackson pointed to Flutter's Betfair exchange product as offering some guidance as to how sports-based prediction markets may compete with FanDuel’s sportsbook operations in states where sports betting is fully legal.
“Do I expect to see a net wholesale switch ... to sports contracts? No. The experience we have of running the [Betfair] exchange in many markets around the world where there are the same taxing and pricing arbitrage opportunities shows that it's just not worth the squeeze,” Jackson said.
“So we’ll see if America is any different, but I’d be very surprised if it is.”
The Flutter boss said where he saw a bigger opportunity for prediction markets was in offering additional “novelty bet” products that are outside the typical scope of a regulated U.S. sports-betting product, citing markets such as the next pope or winners of reality television shows that have been popular in other markets, such as the UK or Australia.
"It's big from a marketing perspective, a talkability perspective, but it's not a big driver of revenue,” Jackson said of novelty markets. “There's additional content like that, which the prediction markets could allow.”
"Would that encourage some of the regulators to open up to novelty markets and potentially support political betting here in the U.S.?” he asked. “Let's see.”
Robins also spoke about the impact of prediction markets as a potential catalyst for the further expansion of the regulated sports-betting market in the U.S.
During a first-quarter earnings call on Friday (May 9), the DraftKings CEO was asked about how the company’s conversations with legislators and powerful Indian tribes have been affected by the offerings of Kalshi and others.
“It’s definitely something that they’re talking about, and it’s early days so it’s hard to say at this point that it’s really catalyzed anything, because we haven’t seen any states that are like, yes, we’re going to do this now,” he said. “But definitely, I think step one…is getting their attention and making them start having those conversations, we are seeing that happen.”
DraftKings representatives reportedly told tribes at a meeting during the National Indian Gaming Trade Show last month that they would not seek to circumvent tribes by offering a prediction-market product in California if negotiations to partner with the tribes on a regulated sports betting offering fell through, according to a Casino Reports article that sparked yet another point of contention between the tribes and commercial gaming interests.
“I think as it continues to grow, that’s just going to continue to be a powerful lever that this is happening whether you want it to or not, so do you want to do it in a way that makes sense,” Robins said Friday. “If you’re a California tribe or if you’re a state that hasn’t legalized it yet, does it allow you to prosper, or do you want to watch it happen somewhere else, and I think that’s something that everybody is talking about right now.”
During an earnings call that preceded his conversation with Barclays, Jackson said FanDuel has so far not felt any impact from the prediction markets on its own revenues.
“I don't think that's an issue at all,” he said. “It’s not just in America where there are prediction markets which have differential tax regimes; the Betfair exchange co-operates with much better prices for consumers in many markets around the world, and it's a real niche thing, so I don't worry about that.”
