Flutter Bets Big on Prediction Markets as Investors Brace for Short-Term Pain

Flutter Entertainment is doubling down on prediction markets, doubling down on prediction markets despite investor jitters over near-term profitability. In its fourth-quarter earnings letter to shareholders, the parent company of FanDuel made it clear: 2026 will see ramped-up spending on its new prediction markets product, even if that means accepting higher losses in the short run.

The company said it plans to increase prediction markets investment with adjusted EBITDA losses expected to land toward the top of its previously guided $200 million to $300 million range. In plain terms, profits will take a near-term hit as Flutter builds out the business.

Why Flutter Sees Upside with Prediction Markets, Not Erosion

One of the biggest fears in the sector is whether prediction markets will cannibalize traditional online sportsbooks. If customers shift dollars from sports betting into event contracts, the net effect could be less exciting than the headline growth suggests.

Flutter CEO Peter Jackson sought to tamp down that narrative. “We have not identified any evidence of any meaningful impact,” he said, referring to fears that prediction markets are eating into FanDuel’s sportsbook business.

The company pointed to an internal review to back that up. According to Flutter, the analysis drew on industry channel checks, third-party data analysis of deposits, actives, and app download trends, and detailed analysis of FanDuel customer trends, and found that any handle effect likely sits in “the low single digits percentage points.” It also stressed that prediction markets have “not been a significant driver of the moderating customer and handle trends we have observed.”

Flutter is also drawing attention to performance in newly opened states to support its case that demand remains strong. In Missouri, for example, user growth outpaced what executives had modeled. The company said acquisitions there “were well ahead of expectations, reaching 5% of the population within the first 30 days, making Missouri one of our best state launches to date.”

Taken together, Flutter argues that prediction markets are not hollowing out its sportsbook, instead describing them as “a significant incremental growth opportunity,” and goes a step further by suggesting that “the emergence of prediction markets will accelerate the path to state regulation of online sports betting and iGaming.”

Inside the FanDuel Predicts Rollout

FanDuel has already rolled out FanDuel Predicts, a standalone app built in partnership with CME Group, one of the largest derivatives exchanges in the world.

The app began its launch in late 2025 and has been expanding across the country in phases. Users can trade contracts tied to sports outcomes, as well as take positions linked to major financial benchmarks such as the S&P 500 and Nasdaq-100, commodities including oil and gold, and macroeconomic indicators like CPI and GDP.

Flutter says early usage patterns are lining up with expectations. “The vast majority of the activity focused on sports, and average volume per customer [is] in line with expectations,” the company told investors.

Executives see major sporting events as natural catalysts for further adoption. Development plans are geared toward the 2026 FIFA World Cup and the start of the 2026/27 NFL season, two tentpole moments that could bring new users into the product.

Rival DraftKings is also working with CME on its own prediction markets offering. The parallel moves reiterate how seriously the leading US operators are taking this category. What started as a niche corner of the market now looks like an emerging competitive front.

Flutter’s general thesis rests on expansion rather than substitution. The company describes prediction markets as “TAM expansive” or “Total Addressable Market expansive,” arguing that they open the door to customers who cannot legally access traditional online sportsbooks. Roughly 40% of the US population lives in states without regulated online sports betting, and Flutter believes event contracts could reach some of those consumers. It also sees potential to attract new sports and entertainment-first customers who may not have engaged with a sportsbook before.

Beyond distribution, Flutter thinks it has an operational edge. The company says it is “uniquely positioned to price complex, correlated markets in real time,” and has signaled interest in using its proprietary models to provide market making services, which would extend its expertise in odds setting into a new but related arena.

Flutter Entertainment’s Financial Pressures and the 2026 Roadmap

The prediction markets push is unfolding against a more complicated financial backdrop.

Bank of America analysts recently downgraded both DraftKings and Flutter, citing prediction markets among several headwinds. The bank lowered Flutter’s price target from $325 to $250, arguing that even if cannibalization remains limited, the added competition and margin volatility could weigh on the sector.

At the same time, operators are contending with shifting tax regimes and uneven sportsbook margins in key states. This has made investors more sensitive to any new initiative that requires heavy upfront spending.

Flutter has also been reshaping parts of its organization. Around 250 roles are being eliminated in Leeds in the UK as the company consolidates technology platforms and adjusts to regulatory and cost pressures in Europe. Earlier quarterly results showed revenue growth but also included a sizable net loss in the third quarter of 2025, driven in part by impairments and market access costs.

Against that backdrop, management is asking shareholders to focus on the long game. For 2026, the company signaled that guidance assumes adjusted EBITDA investment near the top of the previously outlined $200 million to $300 million range. It also indicated that customer engagement from prediction markets is likely to skew toward the back half of the year.

The message from the top is: “Our priority is to build value for the future, while also maintaining the flexibility to accelerate investment. We believe this will position FanDuel to deliver future growth and harness the long-term opportunities for our business.” For now, Flutter is betting that patience will pay off.

Tags: Flutter Entertainment, FanDuel, prediction markets, sports betting, CME Group, 2026 FIFA World Cup, NFL season, DraftKings, total addressable market, TAM expansion, event contracts, online gambling, sports wagering, financial derivatives, market making, EBITDA, Bank of America downgrade, regulatory expansion, Missouri sports betting, app downloads, user acquisition, trading volumes, macroeconomic indicators, S&P 500, Nasdaq-100, commodities trading, CPI, GDP, cost pressures, European restructuring, technology consolidation, shareholder returns, long-term growth, strategic investment

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