Kalshi’s sports event contracts have helped the platform become approximately one-fifth the size of sports betting giant DraftKings.
The Financial Times reported that Kalshi generated $1.3 billion in estimated annualized revenue from sports contracts, roughly 20% of DraftKings’ $6.5-6.9 billion in estimated 2026 revenue.
Key Takeaways
- DraftKings reported sizable Q4 2025 growth despite its stock price plummeting.
- Kalshi is up from 600,000 to 5.1 million active monthly users since the start of 2025.
- America’s top sportsbooks launched prediction markets to rival Kalshi and others.
The Financial Times’ Saturday report detailed the extraordinary growth of Kalshi, the most popular platform in the skyrocketing prediction industry.
The American Gaming Association previously revealed that legal sportsbooks generated $13.7 billion in revenue in 2024. The industry has also produced more revenue with every passing year since sports betting was legalized federally in 2018.
DraftKings last week reported a 43% increase in year-over-year revenue during Q4 2025, ending the fiscal year up nearly $6.1 billion. Despite that, it also announced that it anticipated $6.5-6.9 billion in year-end revenue during 2026, which fell short of the $7.2 billion that was expected.
The company’s stock had already been trending down, but it plummeted from $25.79 per share at noon on Thursday to $21.51 at 9:30 on Friday morning. The stock price is now down 18.96% over the last five days, 33.29% over the last month, and 52.39% over the last six months.
Flutter Entertainment, the parent company of FanDuel, has also experienced a similar phenomenon. Its stock is down 18.15% over the last five days, 33.58% over the last month, and 57.43% over the last six months.
Essentially, Kalshi’s meteoric growth coincided with the two largest sports betting operators losing half of their market value.
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Kalshi thrives off sports contract trading
Kalshi’s sports event contracts soared during the football season. According to The Financial Times, about 90% of the platform’s annualized estimated revenues are tied to sports contract trading.
The platform’s active monthly user activity is also up 8.5 times since the start of 2025. According to data from Sensor Tower, which measures the digital economy, monthly users climbed from 600,000 to 5.1 million during that period.
Sportsbooks have not shown much opposition to prediction markets up to this point. DraftKings CEO Jason Robins even said that individuals who moved to prediction platforms from sportsbooks were predominantly “low-margin or even negative-margin customers.”
Despite that, DraftKings and FanDuel also launched their own prediction markets in December and January, respectively, to compete with prediction markets.
That included states where they weren’t authorized to offer sports betting services.
PYMNTS also noted that sportsbooks’ model is inherently tied to chance, and their large customer base can cause huge swings in the company’s bottom line.
“But even as DraftKings approaches profitability, elements of its revenue base remain inherently variable,” the report added. “Sports outcomes can materially affect quarterly results, with the company estimating that a one-standard-deviation swing could move revenue by roughly $150 million in either direction.”
What’s the big deal?
Kalshi and other prediction platforms, such as crypto.com, Polymarket, and Robinhood, have all taken advantage of a legal distinction that allows them to operate more efficiently than legal sportsbooks.
Because all prediction platforms are regulated by the Commodities Futures Trading Commission, they do not have to pay to receive state-level licensing or split their profits in the form of gaming taxes. That means that they operate under an entirely different framework than sportsbooks, despite offering very similar products.
That has not gone over well in the majority of jurisdictions. More than a dozen states are caught in legal battles challenging the legality of prediction platforms’ brute force approach, which has included lawsuits against gaming regulators trying to rid them from their markets.
