Betting stocks slammed on growing pressure from prediction markets

The duopoly that dominates the US online sports betting business — DraftKings and FanDuel parent Flutter Entertainment — dove Tuesday after prediction markets company Kalshi quietly introduced a new feature mimicking the popular parlay-style sports bets that have been an important differentiator for the sportsbooks from fast-growing prediction markets.

Robinhood Markets, which has partnered with prediction markets platform Kalshi to offer event contracts to its users, has surged to record highs in recent days on signs that its prediction markets business is gaining traction as the NFL season unfolds.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

Market analysts have noted that prediction markets — which in the US are regulated as financial products by the CFTC — have some significant regulatory advantages compared to non-prediction market sports betting activity, which typically operates under state gaming regulators.

“Prediction markets like Kalshi, which is available nationwide to anyone over 18, are... increasingly an alternative to traditional online sportsbooks like DraftKings, which is generally available 21 and up in about half the country,” analyst Edwin Dorsey wrote earlier this month on his newsletter The Bear Cave, which spotlights potential short positions on some stocks.

Separately, Flutter is also under some idiosyncratic pressure amid reports that Rachel Reeves, the UK’s chancellor of the exchequer, is open to raising taxes on the country’s gambling companies in the upcoming budget.