Published on: August 21, 2025, 09:56h. 

Updated on: August 21, 2025, 10:17h.

• One analyst described sportsbooks’ foray into prediction markets as “alluring”
• Another remarked that the CME/FanDuel agreement opens the gates
• The collaboration between CME and FanDuel, announced Wednesday, will introduce financial event contracts to FanDuel’s clientele

On Wednesday, CME Group (NASDAQ: CME) and Flutter Entertainment’s (NYSE: FLUT) FanDuel revealed a joint venture aimed at delivering derivatives linked to financial occurrences to the sportsbook’s users. Wall Street’s outlook on this development is optimistic.

With other prediction market providers like Kalshi and brokerages such as Crypto.com and Robinhood emerging, some analysts see FanDuel’s entry into prediction markets as a strategic move. Currently, the CME/FanDuel collaboration is set to launch yes/no futures linked to shifts in cryptocurrency, commodities, equity indexes, and economic datasets, allowing FanDuel to engage in the prediction markets space in the US more dynamically.

Prominent US online sports betting operators have primarily been cautious about the prediction markets landscape, largely due to potential conflicts of interest among stakeholders,” comments Jeffries analyst James Wheatcroft. “By teaming up with the globe’s largest derivatives marketplace, FanDuel positions itself to seize emerging opportunities around event-based contracts and innovate with new product launches.”

The CME/FanDuel service is anticipated to debut in the fourth quarter and will function through a dedicated mobile application separate from the company’s existing iGaming and sports betting framework.

‘The Gates Are Wide Open,’ Analyst Declares

Citizens Equity Research analyst Jordan Bender mentioned in a message to clients that the CME/FanDuel arrangement signals that “the gates are wide open” for sportsbook operators to react to the competitive challenge presented by firms such as Kalshi and Polymarket.

Regulatory factors still need to be considered; for instance, it remains uncertain whether the CME/FanDuel offering will roll out across all 50 states like Kalshi, which would allow access to major markets like California and Texas, or if it will be limited to the states where FanDuel already operates. Nevertheless, it’s evident that FanDuel can now maneuver more effectively in its prediction market strategies.

The message is now unmistakably clear that unless the Commodities Futures Trading Commission (CFTC) deems sports contracts illegal, FanDuel is establishing the groundwork for a long-term exchange, assuming federal endorsement,” Bender explains. “Moreover, we expect the company to communicate more openly about its goals in this area in the coming months.”

While neither CME nor FanDuel have specifically mentioned sports contracts, if the platform develops to incorporate these yes/no offerings, the integration would likely transition smoothly, given that Flutter’s Betfair division has been providing sports event contracts for over twenty years in other markets.

Time’s Running for DraftKings

FanDuel and DraftKings (NASDAQ: DKNG) essentially dominate the US sports wagering landscape, and with FanDuel securing access to prediction markets, DraftKings may feel pressured to respond promptly.

Partnering with the renowned derivatives leader CME lends FanDuel a level of credibility as they explore this burgeoning market,” mentions Truist Securities analyst Barry Jonas. “We now anticipate DKNG may take similar actions to engage in prediction/event trading, noting recent reports about discussions with the startup Railbird Exchange.”

Jonas further emphasizes that the sports products available from Kalshi and similar competitors are “less effective” compared to what’s offered on DraftKings and FanDuel, though prediction markets are enhancing their sports selections, highlighted by Kalshi’s application to introduce football player props, sides, and totals, which could accelerate moves from DraftKings and other sportsbook operators towards prediction markets.