Gambling companies are facing headwinds as the Super Bowl approaches, typically a peak event for the industry. Flutter Entertainment, which operates FanDuel, a popular US gambling app, is experiencing its longest stock skid in 23 years. Flutter Entertainment is a global sports betting and gaming company, operating brands such as FanDuel, Paddy Power, and Betfair. DraftKings, a main competitor, is also trading near its lowest levels since 2023, down significantly from its all-time high. DraftKings is a digital sports entertainment and gaming company.
The Seattle-New England Super Bowl matchup, lacking the celebrity appeal of previous years, is partially responsible. However, a greater concern is the emergence of prediction markets like Kalshi. These markets have rapidly gained popularity, offering a new avenue for sports betting that circumvents state-level gambling regulations affecting traditional apps.
Jordan Bender, a senior equity analyst at Citizens, anticipates record-breaking trading volumes on prediction markets this weekend. He expects legal wagering on traditional sportsbooks, known as ‘handle,’ to decline by 2 per cent compared to the previous year. “A big piece of why we think Super Bowl handle will be down is that prediction markets are taking a bite out of that,” Bender said.
The threat to established gambling businesses comes unexpectedly from prediction markets. Until early last year, Kalshi, a leading US prediction market startup, leveraged its status as a federally regulated financial exchange. It offered niche financial contracts linked to pop culture events and elections, until the Commodity Futures Trading Commission indicated that sports-related contracts were off-limits.
