Online sportsbook operators threw around a lot of cash to acquire customers on a state-by-state basis. Now, they’re preparing to throw around even more to establish themselves in a nationwide business: federally regulated prediction markets.
- Prediction market operators like Kalshi, Polymarket, FanDuel, and DraftKings are raising large war chests and poised to spend big on marketing as federally regulated sports event contracts open a nationwide customer-acquisition race.
- Rising valuations suggest growing investor confidence and intensifying competition, especially as major sportsbook brands launch their own prediction platforms.
- FanDuel and DraftKings are budgeting for substantial near-term financial hits to fund their prediction market launches.
Commentary and fundraising by incumbent and incoming operators of prediction markets suggest they are building war chests and budgeting for significant amounts of spending.
The money being raised and set aside could be used on advertising or technology. It could also be spent on generosity for customers, such as Polymarket's plan to charge users some relatively light fees when it relaunches in the U.S. regulated market (it has technically been offshore since 2022).
Whatever the money is being used for, the fact it is being gathered at all highlights the opportunity that operators see in prediction markets. That is likely due in no small part to the federally regulated exchanges continuing to disrupt the state-regulated status quo for online sports betting in the U.S. with nationally available (and currently legal) sports event contracts.
Some of the money being earmarked could be coming from investors eager to pile into the prediction market business. Jordan Bender, analyst with investment bank Citizens, wrote in a note to clients on Sunday that the valuations of Kalshi and Polymarket are "nearing" that of DraftKings.
Bender pointed to Kalshi’s latest $1-billion funding round, which reportedly valued the company at approximately $11 billion. DraftKings’ market capitalization sat at about $14.7 billion as of Monday's close.
“Kalshi's round implies 16x to 18x its run-rate revenue, despite no profitability, and a significant premium to online gaming valuations during the 2018-2022 bubble,” Bender wrote. “We are impressed, to say the least, and both prediction market companies now flush with cash could indicate a willingness to invest in marketing in the near future.”
Kalshi may not be the only one poised to splurge.
The prediction market operator is facing federally regulated competitors, such as Crypto.com (and its partners), a soon-to-return-onshore rival in Polymarket, and online sportsbook operators DraftKings and FanDuel, which are preparing to launch their own prediction market platforms.
In other words, the prediction market space is growing more crowded, and operators may spend to ensure they stand out from that crowd. It’s not unlike the rush to acquire customers that has happened in states with legalized sports betting, such as the one about to occur in Missouri on Dec. 1.
Prediction markets are currently offering something very much like the Missouri sports betting that will roll out next month. The federally regulated exchanges facilitate wagering by allowing users to buy and sell contracts tied to event outcomes, including for sports, economics, and politics.
While prediction markets rose to prominence last fall by enabling betting on presidential election odds, they have gained even more traction since with their sports event contracts.
Given that those contracts are available in all 50 states, not just those with legalized sports betting, prediction markets now have the full attention of state-regulated sportsbook operators as well.
Heading into Week 13, there are a lot of teams still in the mix for a playoff spot.
— Kalshi Sports (@KalshiSports) November 24, 2025
Can the Texans, Steelers, Panthers, or Cowboys make a run? pic.twitter.com/kH49uzz2tb
FanDuel-owner Flutter Entertainment has made it known that they plan to launch a new prediction market next month in the U.S., FanDuel Predicts.
The FanDuel-branded prediction market is being launched in partnership with derivatives giant CME Group and will offer sports event contracts for trading in states that have not legalized sports betting, such as California and Texas.
That is because the new platform and its de facto sports wagering (like that of Kalshi and Crypto.com) will sit under the regulation of the Commodity Futures Trading Commission, a federal entity.
FanDuel will continue to run online sportsbooks and casinos in states that it can, while adding a nationwide prediction market that will offer sports betting where it does not conflict with its state-regulated business.
“This means that a significant proportion of the U.S. population will soon have access to a brand new FanDuel sports product, operating with the same high standards regarding customer protection, know your customer, and anti-money laundering as all our FanDuel products,” Flutter CEO Peter Jackson said in a Nov. 12 letter to shareholders. “A range of financial and cultural markets will also be offered across virtually all states.”
If you ain't first ...
Flutter also indicated in the same letter that it plans to spend a fair amount of money to get its new prediction market off the ground, as Jackson indicated they want to be “the clear market leader.”
“Our investment will therefore be meaningful, while maintaining a disciplined approach, a strategy which has served us so well since the inception of sports betting in the U.S.,” he said in the letter.
The Flutter/FanDuel plan outlined in that letter included an expected hit of $40 million to $50 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) in the fourth quarter of 2025. In 2026, Flutter expects another hit to EBITDA of $200 million to $300 million.
Some of that spending may find its way to the players.
Enjoying Covers content? Add us as a preferred source on your Google accountAnalysts at Jefferies, another investment bank, met with Jackson in Las Vegas during the Global Gaming Expo in October. One of the key takeaways about prediction markets from that meeting, according to Jefferies' report, was that "generosity is key," with Flutter offering around $2.3 billion a year in the U.S. in "free bets."
Always read the fine print
A footnote in Flutter’s latest financial results also said that, according to the terms of their partnership, CME Group will get approximately 50% of the gross revenue generated by FanDuel Predicts before any deduction of promotional expenses.
“This revenue share cost will be accounted for in cost of sales,” the footnote added. “FanDuel will bear 100% of costs to support the FanDuel Predicts mobile app (promotional costs, sales and marketing, and non-exchange related cost of sales). CME Group will bear all costs to support the exchange.”
FanDuel’s chief rival in online sports betting in the U.S., DraftKings, is also planning to jump into the prediction market game. And, like FanDuel, DraftKings says that expansion will come with a cost.
One expense already incurred was DraftKings' acquisition of the CFTC-regulated Railbird Exchange, which will be the "foundation" of DraftKings' prediction market business.
According to DraftKings' latest financial filings, the company paid approximately $48.6 million in cash and stock upfront for Railbird. There is also the potential for "additional consideration" of up to $200 million that could be paid out "based on certain post-closing performance metrics."
.@DraftKings set to launch its top-rated mobile sportsbook in Missouri on December 1, 2025.
— DraftKings News (@DraftKingsNews) November 24, 2025
Missouri will become the 29th U.S. state where DraftKings offers sports wagering, in addition to Washington, D.C., Puerto Rico, and Ontario, Canada.
🔗More: https://t.co/UxAOumUpcD pic.twitter.com/05Vu9bFTDB
The Boston-based online gambling company said earlier this month that it was revising its financial guidance for 2025. The updated forecast includes a tough football season for DraftKings, but also the cost of launching DraftKings Predictions “in the coming months,” pending all necessary regulatory approvals.
DraftKings now expects revenue of between $5.9 billion to $6.1 billion this year, and adjusted EBITDA of $450 million to $550 million. Revenue and adjusted EBITDA were previously expected to be $6.2 billion to $6.4 billion and $800 million to $900 million, respectively.
DraftKings CEO Jason Robins wrote in a letter to shareholders on Nov. 6 that his company will pursue the opportunity presented by prediction markets, “and we will win.”
That said, Robins did suggest the company will keep an eye on how much it is spending on the effort.
“We will be measured in our investment level, understanding that gross profit payback periods need to be shorter relative to our more established product lines, where we have more predictability around what customers we acquire will be worth over time,” Robins wrote.
