Posted on: January 7, 2026, 10:06h.
Last updated on: January 7, 2026, 10:33h.
- Research indicates roughly 5% of regulated sportsbook transactions have shifted to prediction markets
- This translates to an estimated annual handle of $8 billion
- Analyst describes this situation as a “wash” for major sportsbook operators
Amid the buzz and the downturn experienced by shares of leading sportsbook operators in 2025, it turns out that prediction markets are not significantly undercutting the business of gaming companies.
In a recent client report, Citizens Equity Research analyst Jordan Bender referenced data from Juice Reel, estimating that prediction markets are responsible for about 5% of the total handle in regulated sportsbooks, equating to around $8 billion. However, it’s crucial to understand that handle signifies the total betting volume, not revenue.
Bender observes that 5% is slightly above initial estimates, yet it doesn’t indicate a downward trend for stocks like DraftKings (NASDAQ: DKNG) and FanDuel parent, Flutter Entertainment (NYSE: FLUT).
“From a business viewpoint, we perceive this as a wash for DraftKings, FanDuel (Flutter), and Fanatics, which are currently operating in the prediction market space,” Bender notes.
For sportsbook operators not involved in prediction markets, such as Bet365, BetMGM, Caesars, Penn Entertainment, and Rush Street Interactive, the outlook could be “slightly negative” due to the rise of prediction markets. However, Rush Street Interactive (NYSE: RSI) performed exceptionally well last year and benefits from an iGaming-focused strategy, which provides some buffer against the impact of prediction markets. The company previously indicated it could see advantages from yes/no exchanges leading to a reduction in sports betting taxation in various states, potentially encouraging more states to embrace iGaming.
Prediction Market Users Facing Increased Losses
While it’s clear that the arrival of football season drove prediction market volumes to unprecedented levels, this surge hasn’t benefitted retail clients, who are losing money more rapidly on these platforms than through alternative betting options.
Bender highlights that bettors engaging with prediction markets experienced a 7% loss from wagers made in the 90 days following their first visit to these exchanges, compared to only 1% lost in other gaming venues. The analyst adds that sharp bettors are increasingly taking advantage of retail competitors for single-game outcomes on prediction markets compared to traditional sportsbooks—a trend unlikely to reverse soon since exchanges like Kalshi encourage sharp bettors to participate. These losses are magnified because the average bet on prediction markets stands at $185, which is over three times the $55 average wager at regulated online sportsbooks.
“In essence, prediction markets are intensifying losses for less experienced users, while more knowledgeable bettors are coming out ahead,” Bender states. “Moreover, the retail segment is losing at a higher pace with prediction markets offering poorer pricing compared to traditional sportsbooks, all while contending with market makers and seasoned bettors armed with sophisticated pricing tactics and official sports data.”
Throughout the 2025 NFL season, Kalshi’s pricing consistently lagged behind that of DraftKings and FanDuel, according to Bender’s analysis.
Additional Insights into Prediction Markets
Bender reiterates that concerns about gaming stocks suffering due to prediction markets are overstated. Shares of DraftKings and Flutter have decreased by 33% and 30%, respectively, since their peaks, but the impact from business diverted to yes/no exchanges falls far short of this level of market displacement.
“To put the situation into perspective, one poorly chosen ‘Monday Night Football’ game could have a comparable detrimental effect on EBITDA as the current total influence prediction markets are exerting on the sector,” the analyst explains. “Furthermore, as legalization progresses, we anticipate the total addressable market for prediction markets will diminish, thanks to an improved product offer (online sports betting) in our opinion.”
Regionally, the Juice Reel data indicates that states like Florida, Georgia, and Texas have yet to delve into the world of prediction markets, with New York, New Jersey, California, Washington, and Ohio taking the lead.