The assertion that the U.S. online sports betting sector faces extinction due to prediction markets may be an exaggeration, and Flutter Entertainment (NYSE: FLUT) CEO Peter Jackson has the data to back this up.
During a discussion with Oppenheimer analyst Jed Kelly, both Jackson and Flutter CFO Rob Coldrake addressed the state of online sports betting versus prediction markets. Jackson, who recently announced his exit from FanDuel’s parent company, emphasized the necessity to differentiate between states that allow online sports betting and those that do not.
“In states without regulated online sports betting, prediction markets are essentially unopposed, with the only competitors being illegal bookies,” Jackson remarked to Kelly.
States like California and Texas, often referred to as the industry’s golden geese, do not yet permit online sports betting. Data suggests that in these regions, the volume of sports event contracts is substantial, indicating a potential risk for sportsbook operators regarding market share losses.
Jackson Advocates for Sports Betting Quality
While FanDuel has a presence in the prediction market sector through its FanDuel Predicts platform, it only offers sports event contracts in states where it cannot provide online sports betting services due to legal restrictions.
Jackson expresses confidence that there is “limited cannibalization” from yes/no exchanges in states that allow online sports betting, revealing to Kelly that Flutter’s competitors are conducting similar analyses and reaching the same conclusions. He asserts that sports betting remains the superior option.
“Data from regulated states shows minimal cannibalization. This is logical since the product offering on a regulated online sportsbook surpasses what prediction markets provide,” Jackson explained to the analyst. “We offer a wider range of markets and are more generous.”
This viewpoint aligns with previous market research indicating that bettors in states permitting legal sports wagering tend to prefer sportsbooks like DraftKings and FanDuel over prediction market alternatives.
Flutter’s Commitment to Sports Betting
Although FanDuel Predicts is regarded as a credible emerging player in the yes/no market, Flutter is fully committed to the U.S. sports betting landscape and plans to invest $270 million in this area for the latter half of this year. These expenditures may impact the operator’s 2026 earnings before interest, taxes, depreciation, and amortization — a development that has caused concern among some investors.
Nonetheless, these investments in the U.S. sports betting sector could yield significant returns over the long term, and Coldrake reassured Kelly that Flutter does not intend to maintain such high spending indefinitely.
“Our focus is on the long-term potential of the U.S. market, which we believe is substantial, and this is far more critical than short-term EBITDA maximization. This investment approach reflects our commitment,” Coldrake shared with the Oppenheimer analyst.