Published on: September 30, 2025, 04:10h.
Updated on: September 30, 2025, 04:10h.
- DraftKings, Flutter, and other stocks faced declines as Kalshi reports high trading volumes
- Introduction of same-game parlays in the prediction market didn’t ease concerns
- One analyst suggests Kalshi’s reported volume might be double-counted
On Tuesday, sports betting stocks took a hit as investors reacted to reports of increased trading activity on Kalshi, coupled with the announcement of same-game football parlays. However, some analysts assert that the market reactions may be exaggerated.
Shares of DraftKings (NASDAQ: DKNG) fell by 11.37% on trading volumes that exceeded the daily average by more than four times, while Flutter Entertainment (NYSE: FLUT), the parent company of FanDuel, experienced a drop of approximately 10.50% with its trading volume being more than three times the norm. Rush Street Interactive (NYSE: RSI), also focused on iGaming and sports betting, declined by 8.39% amid heightened trading activity.
The decline in sports betting equities coincided with news that Kalshi’s trading volume on the weekend of September 27-28 shattered previous records set during the 2024 Election Day. Analyst David Bain from Texas Capital suggests the market’s reaction may be excessive.
“We attribute the downturn in online gaming stocks to media reports regarding Kalshi’s new trading record of around $540 million,” Bain stated. “It’s important to note that the $540 million figure refers to ‘volume,’ which means handle, and there is uncertainty around whether Kalshi is counting both sides of the trade—a practice that would adjust the true figure down to $270 million.”
This suggests that Kalshi’s reported handle may not be as substantial as initially perceived, and even if it were, it would pale in comparison to the estimated $17 billion handle that regulated domestic sportsbooks are expected to achieve this month.
Analyst Comments on Prediction Markets Quality
While the football season is indeed driving higher volumes for platforms like Kalshi, Robinhood, and other event contract exchanges, it does not necessarily indicate that these platforms offer superior sports wagering options.
Bain clarifies that this is not the case. Other analysts note that following four weeks of NFL action, Kalshi’s pricing on money lines and total points has generally been inferior compared to established platforms like DraftKings and FanDuel. This disparity may suggest that in states with legal online sports betting, prediction markets are unlikely to make significant inroads against established gaming companies.
“While the introduction of same-game parlays has occurred, we believe the wagering choices and overall user experience in prediction markets remain limited,” Bain adds. “However, in regions with few or no alternative online gaming options, we see a potential appeal.”
In essence, prediction markets like Kalshi might attract bettors in states such as California or Texas, but they may not hold the same appeal in places like Illinois, Nevada, New Jersey, New York, and Pennsylvania.
Positive Outlook for Flutter
As the largest online gaming operator globally, FanDuel’s parent Flutter has the advantage of considerable international presence, which can mitigate some of the downward pressure from competition in the prediction market. Moreover, Wall Street appears to favor Flutter’s stock.
In a note to investors, Jefferies analyst James Wheatcroft maintained a “buy” rating and a price target of $380 for the sports betting stock, suggesting nearly a 50% upside from the closing price on Tuesday.
The analyst cites various supporting factors for the assertion that Flutter’s recent decline was overblown. These include FanDuel’s expansive product lineup and marketing investments—elements that are not typically associated with prediction markets. Wheatcroft highlights that states permitting online sports betting might take measures to restrict or outlaw prediction markets, and any potential Congressional approval for yes/no exchanges would be advantageous for Flutter, given its established foothold in the European market, which would level the playing field for gaming operators.