What We Learned About FanDuel And Prediction Markets In Q1 Earnings
FanDuel’s CEO is out, and parent company Flutter said it's making markets on another exchange. Roundup: New report details issues with Polymarket’s US launch; Elastics raises $2M for AI agents in PMs.
FanDuel parent company Flutter is making markets at another prediction market, CEO Peter Jackson said during Q1 earnings.
Flutter also announced that FanDuel CEO Amy Howe would be leaving that role; more at The Closing Line.
While FanDuel has its own prediction market platform called FanDuel Predicts, the company is also getting into market-making on other platforms. From a letter to Flutter shareholders (emphasis added):
We believe our world-class, proprietary pricing capabilities can also unlock a significant market-making opportunity. In April, we began trialing market-making services on a major, third-party prediction market platform. It is early days, and our initial focus has been on optimizing spreads across a range of contract types and testing capabilities to ensure we are well positioned to balance growing market share while scaling risk management. Early indicators have been encouraging, and we expect to launch our market-making platform in the coming months.
From the earnings call:
Q: “Just going back to the market making and as you’re able to integrate that into your product, can you talk about does that just give you the ability to merchandise that product better, either through customer credits or other things you can do to drive engagement? Can you just talk about the importance of putting market making behind that?”
Jackson: “Jed, you are right, that market making is an exciting opportunity, and I think it is a great way to showcase the quality of our pricing capabilities that we have in the business more generally. When we think about the opportunities, it is principally around combos, and we are going to be market making on as many platforms as we can. I think it is a good opportunity for us to monetize our pricing expertise in doing so. The point you’re raising, if we’re doing it on our own platform it may allow us to change the dynamics of a customer objective—there are interesting possibilities there that we are considering.”
The third party was not explicitly stated by Flutter.
Yesterday, I wrote about how parlays are driving recent volume increases at Kalshi:
In recent days, parlays at Kalshi have accounted for anywhere from 25 to 30% of volume. In April, parlays were about 23% of volume, up from 17% in March.
Some other things we learned about FanDuel’s prediction markets plans and progress from Q1 earnings:
Flutter continues to say impact to handle growth from prediction markets is limited.
Strong launches in both Missouri and Arkansas back up the thesis that sports betting products still have strong demand despite the existence of prediction markets.
Jackson said there has been “good progress” on FanDuel Predicts in its early days.
Here is more from the shareholder letter (emphasis added):
We continued to see only a limited cannibalization impact from prediction market operators on our sportsbook growth, consistent with our prior estimate of a low single-digit percentage effect on handle growth. This estimate is primarily based on a comprehensive tracking of deposit data, along with download data and monitoring of trends we are observing within the FanDuel customer database. We believe this limited impact reflects the fundamental differences in product propositions between sportsbooks and prediction market platforms, customer age profiles, and concentration of prediction market activity among entertainment-first and low-value users.
While the direct cannibalization impact has been limited, we do believe prediction market operators may be attracting some new, incremental entertainment-first recreational customer cohorts, and we continue to monitor the impact of prediction market operators on the broader sports-betting ecosystem. Our recent launches in Missouri and Arkansas were both ahead of expectations, further validating that demand for sports betting products remains strong in states where it has been previously unavailable. …
Prediction markets
We continue to view prediction markets as a very attractive, incremental opportunity providing an avenue to acquire customers ahead of sports betting regulation in new states. Our in-house expertise and capabilities place us in a strong position to capitalize on this opportunity in the long term. We are making good progress on FanDuel Predicts, with further improvements to be delivered during the year. However, while the fast-moving and complex regulatory environment means that product delivery timescales have at times been challenging, we are prioritizing new product roll-out, and we are focused on building the operational flexibility required to deliver our ambitions.
In Q1, FanDuel Predicts was expanded nationwide across financial, economic and commodities contracts, with sports available for trading in 18 non-sportsbook states including California, Texas and Florida. During March and April, we widened our range of sports markets, and the first real testing of our generosity capabilities saw encouraging returns with strong app downloads through March Madness.
At the start of April, we launched the FanDuel “One App,” dynamically delivering sports betting to those customers in sportsbook states or prediction markets to customers in non-sportsbook states. This will allow us to leverage FanDuel’s strong nationwide brand awareness and significant existing nationwide marketing investment. It also provides a simplified discovery and onboarding experience for new customers, where just one download provides access to an increasingly compelling sports experience.
While revenues in Q1 were modest, reflecting the relatively early stage of our journey, we are focused on delivering the improvements needed during 2026 to serve customers a compelling, truly sports-led experience by Q4. The 2026/2027 NFL season launch will be a major milestone, with many improvements also planned for the FIFA World Cup.
…
As outlined at our Q4 earnings, we continue to expect investment in prediction markets to be toward the top end of our previous guidance ($250 million-$300 million of adjusted EBITDA investment losses). Our priority remains building long-term value, while retaining flexibility to adjust investment where performance warrants. We believe this will position us to deliver future growth and harness the long-term opportunities for our business.
And more quotes around prediction markets from the earnings call:
Rob Coldrake, CFO: “Our disciplined capital allocation policy provides the flexibility to respond effectively to evolving market conditions and emerging opportunities. We continue to prioritize organic investment in our core business and strategic investment, including emerging opportunities such as prediction markets, which we continue to view as an optionality-driven investment within a defined cost envelope.”
Q: The prediction legal environment remains pretty active, I’d say. Curious to hear your expectations for how you think this plays out in the courts. Does that weigh into how you think about your investment spend going into next year and beyond?”
Jackson: “…You’re certainly right that there’s a lot of noise around the legal positions concerning prediction markets. I think it’s important that we remember a few things. First of all, the team have made good progress recently. I think launching the market-making capabilities, the One App which allows consumers wherever they are across America to access sports on FanDuel, I think is important progress. I think we demonstrated the strength of our brand with some of the stuff we did around March Madness. So I’m excited about the incremental opportunity this presents for us.
“Look, until we get through and understand ultimately what the Supreme Court says, I think we're gonna live with this uncertainty. I think in the meantime, we're going to continue to invest in the market-making. I think we're really pleased with the early indications we're seeing from that. I think it's a good opportunity for us to monetize this business. And then from the sort of core Predicts product, look, ultimately we want to acquire as many sports customers as we can ultimately onto our regulated OSB products, and that's what our real focus is. Our intention is to build a great sports experience for customers wherever they are in America, and that's what we're gonna do with the One App.”
Q: “Just as a follow-up on the prediction market side, given you’re upping the investment a little bit for the year, as we exit this year, what would you guys view as a success in terms of user levels in the non-licensed states to prove out that the investment’s playing out like you would like?”
Jackson: “We’re not sort of upping the level of investment. I think what I’d say around what we’re doing with prediction markets is, you know, there’s opportunity to monetize this sort of category through our market making capabilities, particularly in combos, and that’s something you’ll see us do. I think we are focused on delivery of the One App. It’s in the market now, and that lets us utilize and leverage the FanDuel brand nationally, right? Wherever you are, you can open the FanDuel sports app up and access either regulated OSB if you’re here like I am in Manhattan, or if you’re in California, you’d access our Predicts products.”
“We want to acquire as many customers as we can on that through that platform, and I think leverage the national marketing that we already have. We know the FanDuel brand resonates very well. We’re building out, improving the quality of our Predicts experience for customers. We know how to do this, and we will expand the catalog and deliver a much better experience for customers. That’s what we’re focused on delivering this year.”
Coldrake: It’s worth also building slightly on what Peter said to say that we will remain very disciplined in terms of our investment around prediction markets and, you know, we’ll invest more if we see opportunities to do so. It’d be a great position to be in at the end of the year if we’re getting real traction, and we really want to put our shoulder behind the wheel with this. Equally, we will follow the same rigorous framework that’s driven our success in the sportsbook business and we will continue to monitor the returns and the CACs to LTVs as we move through. Certainly when the improved product is in place for the World Cup and then the start of the NFL season, we certainly see some exciting opportunities.”
Q: “First, Peter, you mentioned in the release some challenges shipping product for prediction markets just at the velocity you would have expected or consistent with sports given some regulatory constraints. Can you just talk about or clarify sort of where this bottleneck is most pronounced? Is this sort of a function of the JV partnership? Is this more the lack of guardrails that you're seeing from the CFTC? Just sort of what explains this restriction to product development pacing? Then second, just a clarifying question. The release does note revenues were about $90 million ahead of your guidance in Q1 if you exclude the $45 million of hold impact. Can you just clarify where does this $90 million come from? Is this sort of core sports, core casinos, is Arkansas or prediction markets, and then the decision not to sort of flush this through to the guide?”
Jackson: “I’ll pick up the Predicts product question first of all. I think we have made some good progress in the first quarter. You know, I referenced that. I think the fact that we are now live with our unified or One App is important, and I think is a great step for us, and we’ve also launched the market-making capabilities. We are working hard to improve the breadth of our sports coverage we have, particularly around combos. There have been some, as I said in the release, some challenges around that.”
“I think it’s principally around our ability to access the range of content, rather than a sort of product front-end issue. Look, I’m confident that our teams have the capability to deliver great user experience and products for our customers. If you look at the Betfair Predicts product, which is live in the U.K., I think it’s a fantastic example of what the teams can deliver. I’d say, I know that there’s a lot of work going on to make sure that we can expand the range of the product, particularly from a sort of combo perspective onto our own platforms. We will make sure that we adapt as we need to in order to win in sports.”
Q: “One on U.S. promotions. I’d like to understand more about how U.S. online sports betting promotions in the quarter, excluding state launches, how did they fare on a same state basis? With regards to prediction markets and CAC inflation, can you comment on whether you’re seeing any inflationary impact on customer acquisition costs from prediction market related marketing spend?”
Jackson: “Why don’t I pick up the question around the prediction market inflation? I think, from our perspective, we are not seeing any change in terms of the competitiveness we have in the market. We have reasonably long-term deals in place for a lot of our marketing deals with our partners. We’re not subject to sort of the vagaries of short-term fluctuations from people trying to spend more money or not. It remains a very competitive place, but it has been for some time. I think the nature of our national partners and deals that we have put us in a good place.”
Q: “How do you think about the cadence of the spend on prediction markets 2Q, 3Q, 4Q, in light of the fact that I assume that the One App is not necessarily where you want it to eventually be in terms of the product level, but then also the sports calendar, do you need to be there in a big way for World Cup? Do you wanna wait and save dry powder for NFL? How do you sort of balance that sports calendar as well against that?”
Coldrake: “…Starting off in Q1, that was really about testing and learning for us really in terms of generosity and marketing around our Predicts products and demonstrating our ability to be able to acquire customers and actually establish some presence in the category. We spent circa $40 million in Q1. As I said in my previous answer, it’s pretty early days, actually we’ve always said consistently that we anticipate the majority of our spend on this to be in the second half of the year, our view has not changed. We will invest behind the World Cup, and we expect to ramp our spend slightly from where we’ve been in Q1 in Q2.”
“We also retain the right to flex that, as I mentioned earlier, because we’re going to closely be looking at the returns that we’re getting on a CAC and LTV basis on the prediction customers that come into our ecosystem. And then, you know, we really want to get behind the start of the NFL season in the second half of the year. We need to make sure that we’ve got the right products in place to do that and, you know, we’ll be looking at the prediction investment envelope alongside what we’re doing in our core sportsbook as well. As we’ve always said of our capital allocation framework, we’ll be investing where we see the best returns in the business.”
“We don’t see the overall envelope changing from where we were previously at with Predicts at this point in time. It’s an evolving picture and, as I said earlier, it would be great to be here at the end of the year saying we’re actually spending more because, you know, it’s really taking off behind NFL in the second half of the year.”
Q: “Peter and Rob, just maybe super high level, we noticed that there was an application for a direct FCM license recently. Just wondering if any of the management changes made allow for a bigger or slightly bigger rethink on strategy in your approach to vertical integration in prediction markets? And then Rob, if we could just get a little color for the second half on sort of your thoughts around revenue contribution and what’s baked into the guide directionally, obviously not solid numbers, but directionally for prediction markets in terms of contribution in the second half.”
Jackson: “On the license application, yeah, I think in general, I’d go back to what I was referring to earlier on the call. We want to make sure that we can adapt and do what we need to do in order to win. We’re very much focused on ensuring that we can build a great sports solution for customers wherever they are. You know, we need to make sure we’ve got the right range of products available to them. We’re connected to other venues at the moment, but of course, we have made an application which provides us with further optionality. We’ve got to adapt and do what we need to do in order to win for our customers.”
Coldrake: “On the prediction market revenue contribution, we’re not guiding in detail at this stage. I think that is the best indication that you can take, Shaun, is what I mentioned earlier in the sense that we intend to step up the spend as we move through the year. We’ll see some upticking in Q2, and then we’ll intend to do more behind the NFL in Q3 and give more detail in time.”
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Prediction markets roundup
🚨 The important stuff
Gambling addiction isn’t just about casinos and sports betting. Prediction markets are now concerning clinicians. (10 WBNS): “Cynthia Grant is the vice president of clinical for Birches Health, which is an online therapy clinic for gambling addiction. She shared what her clinic is experiencing as prediction markets begin to grow in popularity.”
“We are seeing some very early signals of things that we are watching for. One of those is that people are spending a lot of time tracking how they're doing on the prediction markets. So they're watching, they're following, they're thinking about it more and more. And when that starts to take over parts of a person's day, or if it goes from something that's occasional and fun and entertaining to something that really starts to live in your head, that's when we know that there is something that could potentially be emerging as a problem.”
Polymarket’s Homecoming Is Shaky and its U.S. CEO Is AWOL (The Information, paywall): From one of the reporters:
⚖️ Legal and regulatory news
Sen. Dave McCormick: Prediction markets are booming. Washington must catch up (Fox News): “Given this massive influx of retail participation in these markets, we need to update the regulatory framework to protect investors, strengthen market integrity and keep America at the forefront of this latest financial innovation.”
Updates from attorney Daniel Wallach on active litigation:
Daniel Wallach@WALLACHLEGALA federal judge has remanded the State of Washington's civil enforcement action against Kalshi back to state court, finding "no substantial federal issue" and noting that the complaint "only targets activities determined to be gambling under state law."
11:37 PM · May 6, 2026 · 1.75K Views1 Reply · 2 Reposts · 3 LikesDaniel Wallach@WALLACHLEGALOn the eve of tomorrow's Fourth Circuit oral argument in Kalshi v. Maryland, the State of Maryland has filed recent decisional law from the CA6, SD OH and WD MI preliminarily rejecting PM's federal preemption theory as "supplemental authority" for the 4th Circuit to consider.
12:43 AM · May 7, 2026 · 543 Views1 Repost · 2 LikesAGA CEO Miller calls federal prediction market regulator ‘a joke’ (CDC Gaming): “Miller took aim at Selig for his comments that the CFTC has exclusive jurisdiction over regulating the prediction markets. Those who oppose that are getting taken to federal court by the CFTC and prediction market operators.”
“The head of the CFTC, quite frankly, is a joke,” Miller said. “He believes somehow that what he’s doing is Uber and the rest of the country is the taxicab industry. That’s not the case. He’s not facilitating something that’s a public good. A federal regulator charged with regulating derivatives around agricultural contracts should not be engaged in it.”
CNIGA Responds to Leading Pro-Prediction Market Coalition Conceding on Casino-Style Gaming (press release): As the public comment period closed on the Commodity Futures Trading Commission’s (CFTC) Advanced Notice of Proposed Rulemaking (ANPRM) on prediction markets, the Coalition for Prediction Markets conceded to the CFTC in its April 30 comments that it wants “a formal rule defining ‘gaming’ to cover the casino-style games traditionally regulated by states.” This underscores the arguments California tribes have made for over a year: that there are limits on what can be listed as event contracts.
“On the same day the Senate moved to block members and staff from participating in prediction markets, the Coalition for Prediction Markets acknowledged—for the first time—that there are limits to what constitutes permissible activity under the Commodity Exchange Act. This shift reflects a growing recognition that their position is untenable,” said James Siva, Chairman of the California Nations Indian Gaming Association.
“These platforms are reacting to mounting legal and political pressure in an attempt to preserve their ill-gotten sports betting market share. Today’s concession only underscores our argument that sports-based event contracts are gaming. If the Commodity Futures Trading Commission is unwilling to act, Congress must step in. Contracts tied to sporting events invest nothing in tribal governments, education, roads or bridges. There is no public interest in lining the pockets of these corporations. The house of cards is starting to fall,” Siva concluded.
Prediction Market Pulse catalogued and analyzed all the comments to the CFTC here.
CFTC eyes Minnesota as next front for prediction markets fight (Semafor): “As the Commodity Futures Trading Commission takes a growing number of states to court over prediction markets, Chair Mike Selig is monitoring Minnesota and other states that advance legislation that would ban or regulate them, a person familiar with his thinking told Semafor.”
📣 Industry news
Elastics Raises $2M Pre-Seed for AI Agents for Prediction Markets (press release): Elastics secured funding to democratize quantitative trading by giving individual traders AI-powered tools to automate research, execution and portfolio management on prediction markets and beyond.
During his time at Goldman Sachs, Szymon Pawica watched quantitative funds operate with an edge most traders could only dream of: rooms full of expensive quants and developers building models, automating strategies, and processing data at a scale that retail traders simply can’t match. After leaving the firm, the NYU Stern graduate began trading personally. The gap between what he had seen at work and what was available to him as an individual trader was hard to ignore.
“The quant edge at hedge funds comes down to people and infrastructure,” Pawica said. “We think AI can now replicate most of that and make it available to anyone.”
That conviction led Pawica to found Elastics with Mateusz Brodowicz, a University of Houston mathematician who previously built quantitative models for a prediction markets fund. Together, they’re building what they describe as an AI-native operating system for prediction markets, a platform that gives individual traders access to the kind of automated research, execution, and portfolio management tooling that has historically been locked behind the walls of institutional finance.
The Warsaw-based startup announced today that it has raised $2M in an oversubscribed pre-seed round led by Frst, the Paris-based venture firm with over $200M in assets under management. The round also includes angels from across the AI and crypto world, among them the co-founders of ElevenLabs, partners from XBTO, an a16z scout, and a co-founder of RedStone.
Crypto-First Entertainment Platform, Roobet Announces Launch of its New Prediction Markets (press release): Roobet, the global crypto-first entertainment platform, has launched its prediction markets offering, going live on May 6, 2026, at roobet.com/predictions.
With the launch, Roobet becomes the first major crypto casino to offer fully integrated prediction markets — expanding beyond traditional casino and sportsbook experiences into one of the fastest-growing formats in digital entertainment.
The new feature lets players take positions on real-world outcomes across sports, culture, and major global events, all directly through their existing Roobet accounts.
📖 Everything else you should know/read
Study’s Finding: Better To Bet On ‘No’ In Order To Win Money At Kalshi (InGame): On Kalshi’s single-name markets, the ones where traders are betting on whether a specific person or company will do a specific thing, traders buy ‘yes’ about 61% of the time. And ‘yes’ wins about 32% of the time.
“That monster gap is one of the main findings in a new paper from Robert Bartlett of Stanford Law School and Maureen O’Hara of Cornell’s Johnson College of Business. The paper, Adverse Selection in Prediction Markets: Evidence from Kalshi, analyzed 41.6 million trades across 478,167 Kalshi markets.”
The NHL is running videos with Kalshi content:
Kalshi crashes the polling party (The Argument): “Zachary Donnini, the head of data science at VoteHub, joined The Argument’s Director of Political Data Lakshya Jain Wednesday to discuss what data the model covers and what it predicts…. Controversially, VoteHub’s new model uses data from prediction markets like Kalshi. Zachary defended the choice, arguing that markets can compensate for blind spots in both polling and fundamentals.”
Prediction markets are a great innovation. Let’s not be so hasty to bash them (Globe and Mail): “Recent headlines about new prediction market offerings in Canada have triggered a familiar reaction seen globally: Concerns that these listed event contracts are equivalent to gaming, or worse, a pathway to insider activity or manipulation. Those concerns are understandable. But in many cases, they are based on a misunderstanding of how these markets work and how they should be regulated. Properly designed prediction markets are not simply speculative products. They are tools for generating real-time, actionable information.”
Execs Debate Blurred Lines Between Prediction Markets, Sportsbooks (Legal Sports Report): “A DraftKings executive acknowledged that sportsbooks and trading sports event contracts feel similar for consumers during a Milken Institute panel, as operators of prediction markets argue the products are legally distinct from sports betting. The discussion featured executives from DraftKings, Robinhood and Kalshi, and repeatedly returned to the increasingly blurry line between sportsbooks and federally regulated prediction markets.”
The Prediction Market That Doesn’t Take Your Money (International Business Times): “…a New York-based startup called SafeBets has launched what may be the most architecturally unusual entrant the prediction-markets sector has seen. SafeBets users predict the future pricing of widely traded assets—Bitcoin, gold, oil, shares of major corporations—but they do so without putting any money at risk. They cannot lose. The only thing they can earn is a cryptocurrency called Unicoin, awarded to top performers at the platform's discretion.”
Betting on Trump’s influence? How GA-14 runoff became a testing ground as prediction markets reshape 2026 elections (CBS News): “Political bettors turned their attention to Georgia’s 14th Congressional District, wagering not just on the election’s outcome, but on the enduring influence of Donald Trump within the Republican Party - a real-time example of how political betting markets are beginning to shape the way Americans consume elections.”
“This is an information source that the media and individual citizens will use,” said Zachary Peskowitz, the Masse-Martin NEH professor of political science at Emory University. “Prediction markets and their increased prominence are likely to affect American politics in a variety of ways.”
Everyone Should Go On Kalshi And See For Themselves Whether It Looks Like Sports Betting Or Derivatives Trading (Better Markets): “The portrayal of event contracts on sporting events as something other than gambling is consistent with the ever-increasing gamification of finance. This harms investors by misleading them into thinking they are investing in a legitimate financial instrument when they are simply gambling. And it harms the public by conflating the CFTC’s role as the regulator of the derivatives market with a role as a gambling regulator. The CFTC should be bolstering the line between gambling and investing rather than blurring it. Event contracts on economic events, such as on whether the Federal Reserve will raise interest rates, are a legitimate financial instrument that easily can be used to mitigate financial risk. Event contracts on sporting events are nothing of the kind. Such event contracts are gambling, plain and simple. The CFTC should treat them as such.”
After you shared an article from IB Times about SafeBet today, I wanted to ask what you think about these risk-free prediction markets like SafeBet and Manifolds. Do you think they will be successful in the long run?