Flutter investors hedge their bets as prediction-market challengers up the ante

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.

Killarney’s Jessie Buckley, who’s been sweeping up best actress gongs this film awards season for her role as William Shakespeare’s wife in Hamnet, has a 92 per cent probability of taking home the most coveted prize of them all at the Oscars in two weeks.

That’s according to the current odds on Kalshi, the US prediction market whose popularity has taken off since the country’s presidential election in 2024.

Users of the site – and fellow start-up Polymarket – can bet on almost anything, from the prospect of the US Federal Reserve moving interest rates next month to the chances of California being hit by a magnitude-8 earthquake before 2027, or Elon Musk being cast as the next Superman.

But worryingly for investors in bookmaker Paddy Power’s parent, Flutter Entertainment, about 90 per cent of the fees that Kalshi has collected since its launch almost five years ago have come from sports betting in the backyard of the Irish group’s FanDuel business, its runaway growth story for close to a decade.

The Kalshi threat has fuelled a 66 per cent slump in Flutter’s share price over the past six months, with its woes compounded by regulatory changes affecting its international business – including a jump in UK gambling taxes, set to take effect in April, and a ban on money-based online games in India.

Shares slumped more than 15 per cent in the first few minutes of trading in New York on Friday alone as the market digested weaker-than-expected full-year results and a cautious outlook, published late the previous evening. It came three months after chief executive Peter Jackson issued a profit warning and guided market estimates lower.

FanDuel, in which Jackson moved to take an initial stake within months of taking charge in 2018 immediately after the US supreme court struck down a federal law banning sports gambling, accounted for almost 43 per cent of the group’s $16.4 billion (€13.9 billion) of revenues, according to the results statement.

But after years of strong double-digit growth in handle – the amount wagered by bettors – in FanDuel’s sportsbook as the company rolled out its offering when US states gradually allowed sports betting, it had slowed to 3 per cent in the last three months of 2025, falling shy of market expectations.

The company only launched in one new state last year – Missouri, after the practice was legalised there in November. It is currently available in 23 states, in addition to the federal district of Washington, DC and overseas territory of Puerto Rico.

[ Flutter tries to get on board Philadelphia’s gambling sceneOpens in new window ]

The recent success of prediction markets, meanwhile, has been helped by the fact that they fall – for now, at least – under the jurisdiction of the US Commodity Futures Trading Commission (CFTC), as the bets are sold as so-called event contracts. The CFTC, as a federal regulator, supersedes individual states.

Kalshi and Polymarket have been helped by the Trump administration being more favourably disposed to prediction markets than the Biden one. It hasn’t harmed that Donald Trump jnr has advised both companies.

Still, there are a number of lawsuits under way involving either individual states or Native American tribes, who have a unique place in the US gambling industry, claiming that prediction markets are unlicensed gambling platforms.

Unlike sports betting, where punters are wagering against the house, which sets the odds and stays in business by winning in the end, the predictions market is peer-to-peer based – albeit with the platforms taking a fee for every trade.

Advocates highlight that prediction markets tend to provide more accurate forecasts than traditional betting firms. That, they argue, is because event-related contracts are priced based on how traders are actually betting in the market, whereas bookmakers can adjust odds to attract bets on the underdog and protect themselves from large payouts.

FanDuel and DraftKings – the No 2 player in the US sports betting market – have been so rattled by Kalshi, with its estimated 65 per cent share of the predictions market, that they each launched prediction market apps late last year.

However, Jackson insisted on a call with analysts late on Thursday that prediction markets are not eating FanDuel’s lunch.

“We’ve undertaken a comprehensive review and found no evidence of material cannibalisation on our existing business,” Jackson said. “And this finding is reinforced by our Missouri launch [in December], where customer acquisition trends exceeded expectations, reaching 5 per cent of the population within the first 30 days, making Missouri one of our best state launches to date.”

Jackson suggested that the advent of prediction markets will spur states that have been slow to regulate online sports betting and iGaming to get on with it. He added that the group’s new FanDuel Predicts platform – now live in 18 states – will also lure new customers into the “FanDuel ecosystem” in the meantime.

The shares sell-off on Friday indicates the market is not so confident – especially after the company failed to meet its own lowered revenues and profit forecasts.

“We don’t think the story is broken but the team certainly has a lot to prove now after back-to-back disappointing updates,” concluded David Brohan, an analyst with Goodbody Stockbrokers.

[ Reclusive billionaire Kenneth Dart triples down on FlutterOpens in new window ]

Kenneth Dart, the reclusive Cayman Islands-based billionaire who has built up an 18.6 per cent stake in the business as the share price spiralled over the past six months, must surely be asking questions.

He’s currently about $3.5 billion underwater on his estimated $7 billion or so investment.