It’s looking pretty crowded right now in the prediction market business.
- The growing prediction market sector includes established exchanges, sportsbook brands, and numerous other applicants, raising questions about how many operators the market can support.
- Unlike state-regulated sportsbooks, prediction markets currently avoid state gambling taxes, can access certain state markets, and may attract a larger customer base, which may give operators a better chance of surviving without major consolidation.
- Rush Street Interactive’s move into prediction markets also suggests smaller operators may not need to dominate the industry to succeed, much like the company has done in online casino gaming.
You’ve got pure-play prediction market operators like Crypto.com, Kalshi, Polymarket, and the Robinhood/Susquehanna-based “Rothera” exchanges. Then you’ve also got the sports betting brands: DraftKings, FanDuel, Fanatics, as well as DFS names like PrizePicks and Underdog.
Furthermore, there is a small army of operators with their license applications still “pending” with the Commodity Futures Trading Commission (CFTC).
You've got names like Smarkets, Sporttrade, ProphetX, and Novig lining up. Most recently, BetRivers owner Rush Street Interactive Inc. applied for a designated contract market (DCM) license of its own.
Blask x NEXTPredict: US demand for prediction markets exceeded iGaming interest in Q1 2026https://t.co/fp4FikknYm pic.twitter.com/OGDiUdkezu
— Mick Bransfield (@MickBransfield) June 5, 2026
That’s a lot of potential prediction market operators, and a lot of them aren’t facilitating betting trading at all yet. So, the question is: Can all of these companies actually win in the prediction market game? There has to be both winners and losers, right?
We saw a similar phenomenon play out when legal U.S. sports betting began expanding at the state level in 2018.
Dozens of brands piled into the space, and then consolidation ensued after it turned out the gold rush didn’t have enough nuggets for everybody.
When the Professional and Amateur Sports Protection Act (PASPA) was struck down by the U.S. Supreme Court in 2018, "many expected sports betting to resemble the fragmented European model, with multiple operators competing for balanced market share," NEXT.io explained in March.
"Instead, the market consolidated rapidly around two dominant players (DraftKings and FanDuel), reshaping competitive dynamics in ways few anticipated," NEXT.io added.
The Big 2
Data published Friday from research firm Blask noted there were 22 brands "actively operating" in the event contract business in the U.S., but that the market "is effectively a duopoly" of Kalshi and Polymarket. The two operators have more than 97% of "branded demand" sewn up between them, Blask found.
It may stand to reason, then, that we’ll see some prediction market consolidation at some point. After all, offering de facto sports betting is really doing a lot of heavy lifting for prediction markets at the moment.
However, there may also be reasons why the land rush for prediction markets has a lot more room in which exchanges can run.
Illinois lawmakers passed a prediction market transaction tax on sports-based event contracts overnight as part of the state budget. It would be the first of its kind to "go into effect" on July 1.
— Fairplaygov (@fairplaygov) June 1, 2026
The state expects PMs to pay 1.75% on each wager for the first 5 million… pic.twitter.com/7kLVJgzfvU
The biggest reason may be that operating costs for prediction markets aren’t as crippling as they can be for state-regulated online sports betting operators. DraftKings illustrated this in March, as its investor day presentation indicated the company expects its prediction market platform to have a 10%-to-30% higher adjusted gross margin than its online sportsbook.
“This is because this industry does not have state gaming taxes, and we expect long-term promotions to be more limited,” DraftKings general manager of predictions Jeanine Hightower-Sellitto told analysts and investors.
No state tax is a huge expense removed from the cost equation for prediction markets, which are trying to beat back attempts by states to regulate and tax them. The number of court challenges involving prediction markets, the CFTC, and state authorities continues to grow and could prove devastating to the exchanges someday, particularly if the legality of sports-event contracts is undermined permanently.
But today just isn’t that day.
So, with no state gambling taxes to contend with right now, there’s a lot less of a financial burden on prediction markets. And that may keep companies alive and humming in a way that just wasn’t doable under the state-regulated model for online sports betting.
NEW: Kalshi sent this letter (I obtained today) to key Democrats responding to concerns about underage usage and problematic trading, noting that its average age for active traders is 31 and that the median deposit for 18-20-year-olds is $25. pic.twitter.com/mRbajIP8KO
— Nathan Bomey (@NathanBomey) June 4, 2026
Another thing going for prediction markets is that the player pool may be deeper than state-regulated online sports betting. That is due in part to prediction markets being accessible for people as young as 18, rather than 21 for state-regulated sports betting, which is a significant concern for some folks watching the space.
There’s also the possibility of prediction markets pulling in business from consumers who weren’t state-regulated sports bettors, but crypto or stock market speculators. That raises its own concerns, such as people depleting retirement savings to gamble on sporting events, but it also hypothetically means a larger pool of potential customers for exchanges to acquire.
So, fewer taxes and more players could perhaps keep a prediction market viable for an operator in a way it couldn’t as a state-regulated online sportsbook operator. There is also the not-insignificant fact that prediction market operators can (currently) access hugely significant states like California, Florida, and Texas, whereas state-regulated online sportsbooks are mostly left on the sidelines there.
Citing EKG's research, DraftKings says nearly 70% of sports prediction markets volume comes from states sans legal online sports betting: pic.twitter.com/fktPkaLxrD
— Geoff Zochodne (@GeoffZochodne) May 7, 2026
And if a company is OK without being the biggest of prediction market operators (or even with being a broker or futures commission merchant, not an actual runner of exchanges), their lifespan could lengthen as well. The fact that RSI wants in could be suggestive of this because it’s not the largest online gambling operator in the U.S., but it’s having a very good run these days.
Granted, at this point, it looks like RSI’s interest in prediction markets may be more CYA than DIY, especially if some prediction market operator gets bold enough to launch something resembling an online casino.
“We certainly are never going to be caught flat-footed,” CEO Richard Schwartz said during a fireside chat in May, adding that the company has “strategies in place.”
But if the RSI experience in prediction markets plays out as it did in online sports betting and iGaming, there may be an opportunity for operators to survive and thrive even off the podium.
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Good enough could be good enough
In April, for example, investment bank Citizens reported that Rush Street had a 1.8% share of gross online sports betting revenue in the U.S.
But it’s not in online sports betting where Rush Street is really shining. It's in online casino gambling, as Citizens reported that RSI's iGaming market share was 7% in April, ahead of operators like Caesars and Fanatics. RSI’s first-quarter earnings were sparkling in the eyes of analysts as well, beating estimates for revenue and adjusted earnings.
“We believe this will be the strongest quarter reported by any gaming company during (the first quarter of 2026),” the Citizens analysts wrote.
So, there you have it: an online gambling company that’s doing just fine without being the biggest. And investors have noticed, with RSI shares bucking a trend in the industry by posting huge gains, up more than 100% from a year ago.
If Rush Street believes there may come a day when it wants to be a fixture in prediction market news, it will be well after the big boys have grabbed up a lot of land. But it's possible there still may be more than enough land to go around.
