FanDuel cut its full-year profit outlook as it prepares to launch sports prediction markets next month and absorbs another rough start to NFL betting that has strained sportsbook margins and prompted heavier investment to end the year.
FanDuel Predict will debut in December with sports event contracts across baseball, basketball, football and hockey in states where online sports betting is illegal, parent company Flutter announced in its third-quarter earnings Wednesday. Prediction markets dominated the company’s call with analysts, where executives positioned the product less as a near-term revenue driver and more as a strategic on-ramp to acquire users in non-betting states and nudge lawmakers toward legalization.
Flutter expects a $40 million to $50 million impact to fourth-quarter adjusted EBITDA from the launch, with an additional $200 million to $300 million planned for 2026 to scale the product, introduce parlays and position FanDuel Predict as the market leader by next spring.
Flutter stock falls amid guidance cut
FLUT’s stock was down more than 14% to $201.30 at of 2:30 pm Eastern after guidance cuts.
The company trimmed its full-year adjusted EBITDA forecast to $2.915 billion (from $3.3 billion) and lowered revenue expectations to $16.69 billion (from $17.26 billion), citing “customer-friendly” sports results in September and October, elevated promotional intensity, the cessation of real-money gaming in India and new wagering taxes in Illinois.
Even after the downgrade, Flutter projects 19% revenue growth and 24% adjusted EBITDA growth this year.
FanDuel prediction markets impact
FanDuel executives said prediction markets will allow the company to convert sports-interested users in large non-betting states such as California and Texas, where federally regulated platforms like Kalshi and Polymarket have been offering sports-related event contracts since February. Jackson said the strategy could also accelerate legalization in states actively weighing bills.
“FanDuel Predict is something very exciting for the half of America who can’t currently access sports betting,” Jackson said. “But if you’re in a state getting close to passing legislation, you won’t want to miss out on the tax dollars.”
Flutter said FanDuel Predict will be developed with CME Group and informed by two decades of Betfair Exchange experience. Jackson told analysts the company would “maintain a disciplined approach” to customer acquisition and noted that prediction-market competitors have had “negligible impact” on FanDuel Sportsbook in regulated states.
FanDuel joins DraftKings, which detailed its own prediction-market plans last week, making the two largest U.S. betting operators the first to directly challenge Kalshi and Polymarket with alternatives. Their entry comes as the product faces intensifying state-level resistance, including lawsuits from multiple regulators and tribal gaming groups arguing that sports event contracts constitute illegal gambling.
The shift is already carrying regulatory consequences. Nevada regulators will bar FanDuel and DraftKings from offering sports betting after both committed to offering prediction markets in other states, a stance several other regulators have publicly considered.
FanDuel sports betting takes a hit
FanDuel’s U.S. sportsbook business struggled in the third quarter as NFL favorites continued a months-long run of “customer-friendly” outcomes that dragged margins across the industry.
Sports betting revenue fell 5% year-over-year, pulling sportsbook hold down to 7.4%, about 0.8 percentage points lower than last year and less than half of Flutter’s long-term structural hold target.
But online casino filled the gap, with revenue up 44%, helping U.S. revenue rise 9% overall. FanDuel reported $51 million in adjusted EBITDA, down from $58 million a year earlier.
FanDuel declines to join “uneconomic” promo environment
Executives also pointed to unusually aggressive competitor promotions at the start of the NFL season.
There were “exceptionally high levels of generosity,” in Jackson’s words, which temporarily pressured FanDuel’s parlay penetration and early September handle trends. The company said it deliberately chose not to match what it called “uneconomic offers,” a decision that slowed NFL growth early but helped FanDuel capture 47% net revenue share in September once rivals scaled back.
“People spent a lot of money, but they haven’t really managed to move the needle for themselves,” Jackson said.
Sports betting momentum, NBA lift
Despite the slow start, executives said fourth-quarter trends are improving even as NFL results worsened in October.
FanDuel reported record average monthly players, double-digit handle growth, and stronger performance across basketball, where early-season engagement has surged.
The NBA acted as a key offset to NFL volatility, with a 1.1 percentage point increase in parlay mix year-over-year. Jackson pointed to “excellent engagement” driven by close finishes across the league’s early schedule and odds integrations with Amazon Prime broadcast that elevated visibility and betting activity.
More sports betting investment on the way
FanDuel told analysts it has “leaned in” on sportsbook investment in the fourth quarter after holding back during September’s promotional surge. With competitor offers normalizing and NBA trends ahead of expectations, the company upped spending in October and November to reinforce its lead heading into 2026.
CFO Rob Coldrake said the focus is on targeted, efficient incentives rather than the broad-based boosts seen elsewhere in the market, adding that FanDuel still expects the incremental investment to meet its historical return on investment and payback thresholds.
The company said the Q4 spend is aimed at capturing accelerating NFL and NBA handle, rebuilding Same Game Parlay penetration after September’s distortion, expanding FanDuel’s average monthly player base before new-state launches and stabilizing net revenue margin after Q3’s unfavorable outcomes.
“We’ve got flexibility and agility around where we invest,” Coldrake said. “Generosity remains elevated in the market, but we’re very confident in our posture and what it will deliver for the size of the business we exit 2025 with.”
