Prediction Markets Reshape Betting Landscape: DraftKings, Flutter, and Robinhood Lead Strategic Expansion

The Prediction Market Boom Is Challenging Traditional Sportsbooks

Over the past year, prediction markets such as Kalshi and Polymarket have secured regulatory greenlight to launch sports-based prediction contracts, fundamentally reshaping the competitive landscape. These platforms have rapidly emerged as serious challengers to established sportsbook operators. While industry watchers initially feared major disruption to giants like DraftKings and Flutter Entertainment’s FanDuel, early data suggests the impact remains measured—according to analyst research, legal U.S. sportsbooks have experienced a 5% decline in overall betting handle so far.

However, the trajectory is shifting. The advantages offered by prediction markets are compelling enough that major players can’t afford to ignore the trend. DraftKings, Flutter, and financial services firm Robinhood Markets have all made aggressive moves into this emerging sector. Understanding each company’s strategy reveals whether this market entry will translate into meaningful growth.

DraftKings Positions Prediction Platform as Gateway Strategy

On December 19, DraftKings unveiled its DraftKings Predicts platform, executing a calculated two-pronged approach.

First, prediction markets allow DraftKings to operate in states where traditional sports betting remains illegal—notably California and Texas. This sidesteps regulatory barriers while building user engagement. Second, by demonstrating the prediction market’s revenue potential to state legislators, DraftKings creates a compelling case for why these jurisdictions are losing tax revenue. The strategy aims to accelerate sports betting legalization, with early DraftKings Predicts users naturally transitioning to the company’s sports wagering platform once regulations shift. Market reaction has been positive, with the stock showing partial recovery, setting the stage for potential continued gains through 2026.

Flutter Takes the Parallel Route Through Regional Expansion

The U.K.'s Flutter Entertainment is pursuing a strikingly similar playbook. In partnership with CME Group, Flutter has rolled out FanDuel Predicts across five U.S. states, with nationwide expansion planned throughout the year.

Flutter appears to be using prediction markets as a beachhead in regions where traditional sports betting hasn’t yet gained legal status—identical to DraftKings’ strategy. Beyond market penetration, both companies are likely launching these platforms to counter narratives about eroding market share. Successfully expanding into prediction markets could drive significant valuation gains for sports betting operators. Flutter’s valuation metrics reflect this: the company traded at a forward P/E ratio in the high-20s a year ago, but now sits below 19 times forward earnings, suggesting investor sentiment has cooled amid growth concerns.

Robinhood’s Prediction Markets Become a Revenue Acceleration Tool

Robinhood Markets faced headwinds in recent months following strong 2025 performance, primarily due to concerns about slowing growth. The company reported a notable drop in stock and crypto trading volumes in November, which could pressure future valuations if the trend persists.

However, the company’s prediction market pivot may provide necessary momentum. Robinhood’s prediction platform launched during Q1 2025, reaching a significant milestone by Q3 2025 when prediction market trading generated approximately $100 million in quarterly revenue. With the recent introduction of prop bet and parlay-style contracts, this business segment stands to capture an increasingly larger share of Robinhood’s overall revenue stream, potentially reigniting investor confidence in the company’s growth trajectory.

The Prediction Market Inflection Point Is Now

What emerges from this analysis is clear: prediction markets represent the next frontier for traditional betting and trading platforms. Rather than viewing prediction markets as competition, DraftKings, Flutter Entertainment, and Robinhood Markets have positioned themselves to lead the category. Their capital deployment and platform infrastructure suggest this isn’t a defensive move—it’s a proactive bet on where consumer preferences are heading.

The coming years will reveal whether this strategic shift translates into the market share and profitability gains these companies are banking on. For now, their aggressive moves signal confidence that prediction markets will become a sustained revenue driver, not a temporary trend.