Flutter doubles down on prediction markets despite investor worries about growth

Flutter Leisure is leaning tougher into prediction markets, at the same time as some traders query how a lot upside the transfer will actually ship.

In its fourth quarter earnings letter to shareholders, the mother or father firm of FanDuel made clear that it plans to step up spending on its new prediction markets product this yr. The corporate stated: “We consider this new product permits us to harness a big and incremental growth of the US addressable market forward of additional state regulation – an area the place our scale and expertise give us a pure benefit It expects a rise in prediction markets funding with adjusted EBITDA loss anticipated to be towards the highest of beforehand guided vary of $200 million to $300 million. In different phrases, income will take a near-term hit as Flutter builds out the enterprise.

Administration framed that spending as deliberate. The corporate is positioning prediction markets as a protracted vary development driver, not a aspect experiment, and seems prepared to soak up brief time period dilution to determine a foothold.

Why Flutter sees upside with prediction markets, not erosion

One of many greatest considerations hanging over the sector is whether or not prediction markets will siphon exercise away from conventional on-line sportsbooks. If prospects shift {dollars} from sports activities betting into occasion contracts, the online impact could possibly be much less thrilling than the headline development suggests.

Flutter chief government Peter Jackson sought to tamp down that narrative. “We have now not recognized any proof of any significant impression,” he stated, referring to fears that prediction markets are consuming into FanDuel’s sportsbook enterprise.

The corporate pointed to an inside evaluation to again that up. In response to Flutter, the evaluation drew on business channel checks, third-party information evaluation of deposits, actives, and app obtain tendencies, and detailed evaluation of FanDuel buyer tendencies, and located that any deal with impact seemingly sits in “the low single digits share factors.” It additionally pressured that prediction markets have “not been a big driver of the moderating buyer and deal with tendencies we’ve got noticed.”

Flutter can be drawing consideration to efficiency in newly opened states to assist its case that demand stays robust. In Missouri, for instance, consumer development outpaced what executives had modeled. The corporate stated acquisitions there “had been nicely forward of expectations, reaching 5% of the inhabitants throughout the first 30 days, making Missouri one in every of our greatest state launches thus far.”

Taken collectively, Flutter argues that prediction markets usually are not hollowing out its sportsbook, as a substitute describing them as “a big incremental development alternative,” and goes a step additional by suggesting that “the emergence of prediction markets will speed up the trail to state regulation of on-line sports activities betting and iGaming.”

Contained in the FanDuel Predicts rollout

FanDuel has already rolled out FanDuel Predicts, a standalone app in-built partnership with CME Group, one of many largest derivatives exchanges on the planet.

The app started its launch in late 2025 and has been expanding across the country in phases. Customers can commerce contracts tied to sports activities outcomes, in addition to take positions linked to main monetary benchmarks such because the S&P 500 and Nasdaq-100, commodities together with oil and gold, and macroeconomic indicators like CPI and GDP.

Flutter says early utilization patterns are lining up with expectations. “The overwhelming majority of the exercise targeted on sports activities, and common quantity per buyer [is] consistent with expectations,” the corporate advised traders.

Executives see main sporting occasions as pure catalysts for additional adoption. Improvement plans are geared towards the 2026 FIFA World Cup and the beginning of the 2026/27 NFL season, two tentpole moments that might convey new customers into the product.

Rival DraftKings can be working with CME by itself prediction markets providing. The parallel strikes reiterate how critically the main US operators are taking this class. What began as a distinct segment nook of the market now seems to be like an rising aggressive entrance.

Flutter’s common thesis rests on growth somewhat than substitution. The corporate describes prediction markets as “TAM expansive” or “Complete Addressable Market expansive,” arguing that they open the door to prospects who can’t legally entry conventional on-line sportsbooks. Roughly 40 % of the US inhabitants lives in states with out regulated on-line sports activities betting, and Flutter believes occasion contracts may attain a few of these shoppers. It additionally sees potential to draw new sports activities and entertainment-first prospects who might not have engaged with a sportsbook earlier than.

Past distribution, Flutter thinks it has an operational edge. The corporate says it’s “uniquely positioned to cost complicated, correlated markets in actual time,” and has signaled curiosity in utilizing its proprietary fashions to supply market making providers, which might lengthen its experience in odds setting into a brand new however associated area.

Flutter Leisure’s monetary pressures and the 2026 roadmap

The prediction markets push is unfolding towards a extra sophisticated monetary backdrop.

Financial institution of America analysts recently downgraded both DraftKings and Flutter, citing prediction markets amongst a number of headwinds. The financial institution lowered Flutter’s value goal from $325 to $250, arguing that even when cannibalization stays restricted, the added competitors and margin volatility may weigh on the sector.

On the similar time, operators are contending with shifting tax regimes and uneven sportsbook margins in key states. This has made traders extra delicate to any new initiative that requires heavy upfront spending.

Flutter has additionally been reshaping elements of its group. Round 250 roles are being eliminated in Leeds in the UK as the corporate consolidates know-how platforms and adjusts to regulatory and price pressures in Europe. Earlier quarterly outcomes confirmed revenue growth but also included a sizable net loss within the third quarter of 2025, pushed partly by impairments and market entry prices.

In opposition to that backdrop, administration is asking shareholders to give attention to the lengthy sport. For 2026, the corporate signaled that steerage assumes adjusted EBITDA funding close to the highest of the beforehand outlined $200 million to $300 million vary. It additionally indicated that buyer engagement from prediction markets is more likely to skew towards the again half of the yr.

The message from the highest is: “Our precedence is to construct worth for the longer term, whereas additionally sustaining the flexibleness to speed up funding. We consider it will place FanDuel to ship future development and harness the long-term alternatives for our enterprise.” For now, Flutter is betting that persistence will repay.

Featured picture: Flutter Leisure

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