FanDuel and DraftKings had a lot of interesting things to say about prediction markets during their Q1 earnings calls, arguably leaning into the vertical more than they ever have. Daniel O’Boyle of InGame and I break down that news, plus the other big stories of the week on The Event Horizon podcast.
Before the roundup, more from DraftKings’ earnings call on Friday:
DraftKings CEO: Some Operators ‘Irresponsibly’ Overstating Difference Between Predictions And Sportsbook (InGame): “According to Jason Robins, some prediction markets are ‘irresponsibly saying’ that their product is significantly different than other kinds of sports betting. The DraftKings CEO added that exchanges have to think about how to ‘protect the ecosystem’ in a world where ‘experts’ often make up one side of the market.”
And some excerpts from the earnings call:
Q: …To start with the guidance, Jason, it might get harder to parse out the cost now with the super app, but are you starting to see investment spending like marketing come down across the prediction market business? Maybe on the flip side of that, how should we think about layering in some of the prediction market spend for the remainder of the year?
CEO Jason Robins: Well, I think first start with, I think we mentioned the CACs have been really dropping quickly, it's scaling actually a little faster than we thought. At this point, we are thinking we're gonna probably invest about $200 million-$300 million all-in on Predictions this year. A lot of that will be marketing, some of that'll be product technology investment as well. What that means is that the rest of the business is gonna do somewhere in the $1 billion plus range in adjusted EBITDA this year, which we're really excited about. That's the latest thinking, obviously we'll assess the data, as always, we'll follow what the numbers say.
Q: Just on customer growth and month growth, realize it was up low single digits ex the lottery. Can you just talk about trends there? I think there's a slide in your shareholder deck that says 30% of volume and of prediction market volume in regulated states is coming from regulated markets. Is there something where younger customers that are, like, 18 to 20 just aren’t shifting over to DraftKings as they get older? Can you just talk about the month trends?
Robins: Yeah, I don't really think it has anything to do with Predictions. I mean, if you look at the total customer numbers, they're quite small, single digits. There is volume, but most of that's coming from, you know, lower margin customers as well as also just from market makers and things like that. I think the really important thing is the opportunity to grow MUPs in Predictions. We have the entire other half of the country now open to us, and we haven't even begun to ramp marketing. If you look at our early Predictions data, with very modest marketing investment, we are seeing really exciting things on the customer acquisition side and the CAC side.
I think if you look at the back half of the year, you're gonna see tremendous increase in MUPs for us, really via Predictions customer acquisitions, and we're really excited about that. I think that's kind of our main focus on the MUP side.
Q: You know, Jason, you mentioned some interesting stats on Predictions and specifically volume per customer, bigger than greater than OSB volume per customer. I was hoping maybe you could just flesh out a little bit more about what you've learned so far about the Prediction customer, especially with the stats you gave. What else have you learned about early sense for LTVs? And then what are the sort of take rates that you're seeing early on in against those volume stats that you gave?
Robins: It's a great question. I mean, it's very early, so hard to say. They do look quite similar. You know, the stat that you cited that we mentioned, that is something we're seeing. I think that could also have a lot to do with the fact that it's still early and usually the most avid customers sign up early. That's something we're bearing in mind. If you look at kind of who these customers are demographically, what their spend patterns are, what sports, it's actually quite similar. There are a couple things that are interesting. College basketball, in particular, was even heavier on the prediction side than maybe some of the other sports. That was something that we noticed in as an example.
I think it’s largely because the format is, you know, more of like a singles type of thing, win, loss, that sort of thing, so, you know, versus a sport like NBA, which on the sportsbook side is very SGP (single-game parlay) heavy, and there’s not, you know, a product that’s sufficiently equivalent yet in terms of Predictions to make that as attractive. There’s probably some reasons for it that have nothing to do with the customer, but that is something we noticed. Largely, they look very similar. We’re not seeing a whole lot of differences between who we’re getting on the prediction side and who we have on our sports betting business.
Q: Jason, you know, I think market making and prediction markets has continued to be a focal point. Just kinda curious on where you're at on, you know, experimenting there. What have you learned on pricing? Just, you know, big picture, what's your willingness to kinda, you know, look at third-party platforms and/or potentially hedge via third-party platforms when you see some of the concentration risk that you've done, combos and parlays, as you get more experience with the product?
Robins: Yeah, it’s a great question. I think even beyond hedging, there’s probably arbitrage moments and ways to just increase value. So that’s something we’re definitely looking at. Our market makers stood up in the last couple months. So far so good. We’re making money. It’s one of our fastest to profitability business lines we’ve ever launched, so really excited about that. And we think a lot of opportunity to scale it. You know, we should theoretically have one of the top two or three market makers in the world, arguably the best, given our modeling capabilities. I don’t see, at least on the sports front, I don’t see how anyone is gonna be able to match that outside of maybe one or two of our big sportsbook competitors that also have really strong pricing models internally.
Really feels like we can capture a big chunk of that. I do think that will involve being on third-party platforms. We will obviously focus on our own exchange as well, which is launching in the coming weeks, and we’re excited about that. You know, I think for us to really maximize the market-making opportunity, we wanna be able to participate in different platforms and, you know, examples, like you said, not just to have more volume, but also to be able to, you know, manage risk across a much wider canvas. Just the more opportunity you have to do that, the better that we can optimize. I mentioned earlier, we’re a very data-driven company, so, the more we kinda have access to different ways to manage that risk, I think the better that we’ll perform over time.
Q: Just another one on prediction markets. Can you give us a sense of the profitability of the different layers of prediction markets that, you know, you're expecting to be involved in, sort of where the most economics are for you when you think about, you know, whether it's market making or proprietary exchange or just how we can think about those layers?
Robins: You know, for us, it's really about having the whole ecosystem. It's hard to parse out where the value is because I think it feeds off each other. We do see tremendous value in every layer of the ecosystem, which is why we're playing in all of them. In terms of, you know, profitability versus investment, the market maker should be or is profitable already, that's gonna be the one that's sort of the least capital intensive in terms of investment, and I think will produce really strong results in the near term and continue to grow.
I think when it comes to more of the consumer-facing side of it, we will be investing in customer acquisition, so I think that’s gonna end up being a little bit more of a headwind in 2026, and that’s what’s driving most of the $200 million-$300 million that we said we’re investing in Predictions this year. Those are kind of the two layers. The exchange sort of sits in the middle. The exchange, I think, will be, you know, a little bit of product investment, but if you don’t attribute any of the customer acquisition costs, that should be one that becomes profitable pretty quickly too.
Q: Jason, the shareholder letter mentions that consumers are losing more in prediction markets than OSB, and that’s just surprising to me, at least given the parlay penetration likely lower in prediction markets. Can you just talk about what you’re seeing there? Because I think conventional wisdom would say that your hold will be lower in prediction markets than OSB, but just seeing how you think about that longer term. Thank you.
Robins: It’s not necessarily hold as much as just the rate of loss. I think part of it is that predictions operators, some of them anyway, are sorta irresponsibly saying that this is not the same as a, you know, product like ours, where you have, you know, people playing against each other on prediction markets, when the reality is that most of the money is being put up, most liquidity is being put up by professional market makers, institutions, things like that. I think some people don’t necessarily understand that, and as that becomes more apparent, I think you’ll start to see that moderate.
We saw this in fantasy sports. When you have a peer-to-peer, you know, somewhat of a peer-to-peer setup, you’re gonna have people on one side that are experts, and you gotta make sure you protect the ecosystem as best as you can, obviously within the, you know, rules and regulations, right? Doing things to make sure that you’re building a healthy ecosystem was critical to us building out a sustainable daily fantasy sports product. Right now, I don’t see that necessarily happening with some of our predictions competitors. You know, as time goes on, hopefully we’ll set the standard there and it’ll be something that really, you know, becomes an important part of managing the ecosystem.
📊 The Ticker
For Saturday, May 9, at Kalshi:
Volume: $721.2 million
Sports + parlays: 91.3% of volume
Crypto markets: 7.1% of volume
That becomes the second-biggest day in Kalshi history, behind only the day of the Super Bowl.
Trend line for daily volume:
Polymarket US volume on Saturday: $51.5 million
Prediction markets roundup
🚨 The important stuff
Kalshi And Madison Square Garden Announce Multi-Year Partnership, Naming Kalshi An Official Prediction Market Partner Of The Garden (press release): Kalshi, the world’s largest prediction market, and Madison Square Garden Entertainment Corp. … announced a new, multi-year partnership with The Garden and MSG Networks, including naming Kalshi an Official Prediction Market Partner of Madison Square Garden. As part of this partnership, the sixth-floor concourse at MSG will be renamed the Kalshi Concourse.
“As leaders in live entertainment, we are always searching for opportunities to partner with forward-thinking brands on innovative partnerships, and as such, are proud to welcome Kalshi as the first prediction market partner of Madison Square Garden,” said Doug Jossem, Executive Vice President, Global Sports & Entertainment Partnerships at MSG Entertainment. “By bringing The World’s Most Famous Arena together with Kalshi, we are providing fans with a unique way to experience both brands, and we look forward to exploring how our companies can collaborate through this exciting new partnership.”
“Madison Square Garden is an iconic staple in the lineage of New York cultural history and we couldn’t be more thrilled to officially become a part of the MSG family. Both MSG and Kalshi share a common vision of engaging consumers on the interests they are most passionate about – whether that be pop culture, sports, music or entertainment,” said Adam Barrick, Head of Sports Partnerships at Kalshi. “As ‘The World’s Largest Prediction Market,’ partnering with ‘The World’s Most Famous Arena’ is a major milestone in Kalshi’s history — we’re extraordinarily proud to partner with the best.”
“Kalshi prides itself on being a true New York City institution, and we’re beyond excited to partner with another one in MSG,” added Valeria Vouterakou, Legal Counsel at Kalshi.
As part of this partnership, Kalshi will entitle the sixth-floor concourse of Madison Square Garden, the Kalshi Concourse, a prime branded location with exposure to the millions of fans to attend events at MSG each year. Kalshi will also create interactive digital activations on the concourse to bring fans closer to the brand.
At every event, the concourse is accessed by thousands of guests, serving as the main site for merchandise and concessions, including premier vendors, as well as premium bars and refreshment options. The concourse is also the home of numerous “Defining Moments” exhibits – displays that commemorate major moments throughout MSG’s history with archival imagery and memorabilia.
In addition to the concourse entitlement, Kalshi will be integrated throughout the customer experience for fans attending concerts and comedy events at The Garden, with visibility through multiple touchpoints from digital boards outside as they enter the venue, including MSG’s iconic marquee on Seventh Avenue; to the Kalshi Concourse; to LED signage in the venue bowl.
As part of the partnership, Kalshi will also maintain an impactful presence across MSG Networks through advertising integrations and branded content.
FIFA, Predictstreet and the controversial rise of prediction markets. Just don’t call it gambling… (The Athletic, gift link): “The Athletic spoke to experts with an understanding of the gambling industry to explain the controversy around prediction markets, why some are trying to get them classified as gambling, why FIFA got involved, and whether the two biggest sports leagues in the United States, the National Football League (NFL) and the National Basketball Association (NBA), will follow suit.”
Prediction-Market Companies Are Worried About Their Reputations Risk? Gambling? Not here, say Polymarket and Kalshi. (New York Magazine, The Intelligencer): “But what’s striking about the pushback here is how thoroughly it depends on two premises: that prediction markets have nothing to do with gambling, as commonly understood, and that the people using them are merely participating in an established sector of finance that most people, including a lot of prediction-market users, would find unintuitive or suspiciously legalistic. Again, the trading volume on sports dwarfs everything else on prediction markets, and for many users, Kalshi and Polymarket are substitutes for gambling apps.”
⚖️ Legal and regulatory news
Minnesota Includes Prediction Market Prohibition Language in Public Safety Bill (Sports Betting Dime): “Minnesota may indeed pass legislation to ban certain prediction markets in the state, but will not to do through a standalone bill. Minnesota lawmakers this morning approved SF 4760, an omnibus public safety package, which includes language from the Senate-approved bill SF 4511. SF 4511 seeks to prohibit prediction market contracts based on sports, politics, war, weather, and other markets.”
Senators banned themselves from prediction markets. Will the House? (Roll Call): “Senators adopted their own resolution at the end of last month by unanimous consent, revising the standing rules of the Senate to ban buying and selling contracts tied to the outcomes of specific events. Now, lawmakers in the House are looking to do the same on their side of the Capitol.”
“I think this is something we should be doing as fast as possible,” Rep. Ashley Hinson, R-Iowa, said in an interview.
In Washington state:
Daniel Wallach@WALLACHLEGALKalshi asks Washington federal court to stay order remanding case to state court pending resolution of its appeal to the Ninth Circuit, says being forced to engage in state-court litigation while the appeal is pending "would render Kalshi’s appellate rights meaningless."
1:12 AM · May 11, 2026 · 849 Views2 Reposts · 1 LikeAs Colorado debates sports betting reform, Kalshi operates outside state rules (CPR News): “One of the largest prediction market platforms operates in Colorado essentially as a sportsbook outside the regulated system, according to state officials, complicating efforts to collect taxes and protect consumers.”
SEC delay on prediction markets ETFs echoes a long-fought bitcoin fund battle (CNBC): “Prediction markets ETFs may soon be coming to retail investors and even into retirement plans, but maybe just not as fast as anticipated.
The Securities and Exchange Commission during the second Trump administration has sought to distinguish itself from Biden era regulators with what it calls a move away from the “regulatory creep” that it says has held back markets and innovation. But it caught some in the financial industry off guard on Tuesday when it delayed the launch of 24 prediction markets ETFs, saying it needed more time to study the products before they were released to investors.”
📖 Everything else you should know/read
One of Kalshi’s accounts on Twitter posted that a current UFC fighter was trading on Kalshi (see now-deleted post below).
After I saw the post, I reached out to Kalshi, which told me that this was a mistake to post and that the trades promoted did not happen.
Current and former UFC fighters are prohibited from trading on the UFC, per Kalshi’s rules:
You can watch the podcast on YouTube below, where numerous slips at Kalshi are shown next to the hosts of the podcast, who talk about their picks:
Prediction market conference apparently booted from Vegas: LinkedIn post here.
Prediction markets promise to harness greed for the sake of knowledge — but at what cost? (Australian Broadcasting Corporation): “While the overall idea of prediction markets isn’t new, these platforms have only recently been legalised the United States. And they are already raising a number of serious ethical and political concerns. The trouble is that while their goal is more stock-market-like — aggregating dispersed knowledge to generate estimates about future events — their format currently looks a lot closer to standard gambling, and with fewer safeguards.”
Prediction markets’ ‘easy money’ pitch could become a brand trust trap (eMarketer): “Brands considering prediction markets as engagement or sponsorship vehicles should proceed cautiously. The fast-cash frenzy and viral hype cycle could be short-lived if regulators clamp down on predictive markets or require more financial oversight on users. With an audience that skews toward younger users, brands that associate with the volatile industry could risk long-term credibility damage as losses mount publicly.”
Kalshi’s $22 billion problem (Fast Company): “Things did not go smoothly for Mainland when he made this case before Massachusetts’s highest court. He was quickly interrupted by Justice Gabrielle Wolohojian: ‘If we just zoomed up one level, ‘event contracts’ would not be conceptually incompatible with what we would historically understand to be a bet or wager.’
Prediction markets are gambling and that’s a good thing (Reuters): “The distinction between gambling and what prediction markets offer thus appears to be one of semantics, not of form. However, this does not mean that prediction markets – and other forms of short-term speculation – are inherently harmful. In fact, traditional investing would be worse off without them.”
Polymarket’s Hot New Bet: Hantavirus (Mother Jones): Over the past four days, bettors on the prediction platform Polymarket have wagered nearly $3 million on whether we’ll see a hantavirus pandemic this year. A cluster of cases of a particularly deadly strain of the virus erupted on a cruise ship last month, killing three people out of eight suspected cases linked to the vessel. Though the news has stoked fears, the World Health Organization currently classifies the risk of a full-blown pandemic as low.”
Kalshi also has a hantavirus market; blog post here.
Sports Betting and Prediction Markets Will Produce a Lot of Losers (Santa Clara Markkula Center for Applied Ethics): “How is all of this affecting young people, especially young men, who are the most impacted by the surge in sports betting. Some have become addicted to the activity, and are being harmed by turning away from their studies, losing social connectedness, and losing money, in some cases a lot of money. Others participate occasionally, as entertainment or out of a need to feel part of social group. Still others do not know what to think, but do have questions.”
