Flutter CEO Peter Jackson says FanDuel would not be launching prediction markets next month if he thought it would jeopardize the company’s online sports betting business.
The FanDuel plan centers on two things: protecting its market-leading sportsbook footprint while competing in a fast-growing market that operates in states where gambling is illegal. Flutter executives described event contracts as incremental to revenue, but emphasized their real value is a cheaper acquisition tool in states where FanDuel does not offer sports betting.
“We wouldn’t do anything to put our existing OSB business at risk, but we’re also not gonna sit here on the sidelines and watch someone else go after this big opportunity,” Jackson said during a Morgan Stanley fireside chat Wednesday.
It comes after Flutter’s stock has fallen roughly 25% since January, an $11 billion decline in market cap that analysts often discuss in the context of prediction markets’ growing presence alongside broader sector pressures. Kalshi, for example processed nearly $2 billion in NFL and college football volume in September, more than 90% of its activity, and was on the hook for zero tax dollars to states.
State license concerns remain central
Jackson said Flutter worked through concerns that other states could follow Nevada, where FanDuel surrendered its license at the state’s request. He called Nevada “a unique situation” because FanDuel does not operate a consumer-facing sportsbook there.
To reassure regulators elsewhere, Flutter has agreed not to offer prediction markets inside states where it already operates online sports betting. Jackson said the company has been in direct conversations with regulators, tribes and other stakeholders and would not be launching next month unless it was confident its sportsbook licenses would remain protected.
Several other states, mainly the ones suing to stop prediction markets, have issued similar warnings, though none have yet revoked licenses.
FanDuel adds funnel for sportsbook
Jackson and CFO Rob Coldrake framed the move largely as a new way to reach the half of the U.S. where FanDuel still cannot offer sports betting, setting up a customer funnel that can be migrated into the sportsbook if and when those states legalize.
FanDuel has used a similar approach with fantasy sports and free-to-play games to build audiences ahead of legalization. The company already counts more than 110,000 Missouri users ahead of that state’s launch next month and plans to apply the model in larger states such as California and Texas, where it benefits from years of prior advertising rather than a concentrated launch-day marketing surge.
Jackson added that FanDuel hopes to migrate prediction-market users quickly into sports betting customers once their state approves legislation, a prospect he has repeatedly said prediction markets can help accelerate.
Flutter mainly treat prediction markets as an incremental revenue driver to complement sports betting and online casino. Coldrake said FanDuel will earn exchange and platform fees rather than take on risk and expects its national brand reach to drive more trading activity than smaller pure-play competitors.
“On a standalone basis the economics work. They are [net present value] positive within a relatively short time frame,” Coldrake said.
FanDuel predicts profitability timeline
Flutter expects prediction markets to follow a financial trajectory similar to launching a new sportsbook state, although with lower long term values and a smaller initial investment. It is applying its standard profitability expectations: contribution-positive in year two and cumulative profitability in year three, though that could always change.
Jackson said the company will adjust quickly based on early user behavior around the Super Bowl and March Madness and will continue to invest only where customer unit economics support it.
Analysts pressed the company on the 50% revenue share with partner CME Group and the projected $200 million to $300 million in losses tied to the rollout. Flutter executives argued the arrangement is far cheaper than launching a traditional sportsbook.
FanDuel will consolidate revenue from exchange platforms before paying CME’s share and will rely on its existing national advertising and product infrastructure instead of building new systems to keeps fixed costs low, Jackson said.
Coldrake added that the headline losses are relatively small when viewed through the lens typical state-launch framework. Entering a new sportsbook state usually requires around $35 million for every one percent of the U.S. population. A national rollout under that model would imply more than half a billion dollars for California alone.
