Prediction Markets Surge: Will They Eclipse DraftKings and Flutter in Sports Betting?

"According to New York state data, revenue from online sports wagering has plunged during the NFL playoff season, a period typically booming for betting. This decline coincides with surging volumes on platforms like Kalshi, where NFL-related bets hit a record $720 million last week, including over $100 million on a single game. Kalshi reports sports bets accounting for around 90% of its trading volumes."

"These platforms - operating as federally regulated exchanges - circumvent state gambling laws, drawing users away from established operators like DraftKings ( NASDAQ:DKNG ) and Flutter Entertainment ( ). Equity research analyst Jordan Bender noted that prediction markets are impacting sports betting companies , particularly during major events like NFL playoffs. As volumes rise, these markets are stealing market share and raising the question: Are prediction markets - not sportsbooks - the future of sports betting?"

"Prediction markets pose a direct threat to sportsbooks by offering event-based contracts that mimic betting but operate under different regulations. Unlike state-licensed sportsbooks, platforms like Polymarket and Kalshi can reach users nationwide, even in areas where online gambling is restricted. This accessibility allows them to capture bets on high-profile events, eroding the customer base of traditional operators. For instance, during the recent NFL playoffs, Kalshi saw its five highest-volume games of the season, highlighting how these markets thrive on tentpole sports moments."

Revenue from online sports wagering in New York plunged during the NFL playoff season, a period normally producing strong betting activity. That decline coincided with record volumes on prediction markets such as Kalshi, where NFL-related bets reached $720 million in one week and over $100 million on a single game, with sports bets comprising roughly 90% of trading. Federally regulated exchanges like Kalshi and Polymarket can offer event-based contracts nationwide, bypassing state gambling restrictions and drawing users away from sportsbook operators. Regulators have labeled some products illegal, yet platforms persist and continue to pressure sportsbooks that rely on sports betting revenue.

Read at 24/7 Wall St.