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AIPROPX ReportCNBC · 2h ago
Prediction markets take center stage in latest round of quarterly earnings reports
The latest quarterly earnings reports from FanDuel parent Flutter Entertainment , DraftKings and others shone a spotlight on the burgeoning prediction markets industry.
A growing number of companies are introducing their own prediction market platforms or launching partnerships within the space, said Joel Shulman, the CEO of investment firm Entrepreneur Shares.
As competition continues to grow, the latest earnings reports offer a glimpse at how much companies are willing to bet on its prediction platforms.
DraftKings' CEO Jason Robins said the company's prediction market platform is growing at a booming pace, having launched in December 2025.
"We had over 600,000 customers so far engaged with our predictions offering, and that's just going to explode this NFL season. I'm expecting millions, so we're excited about it," Robins told CNBC's " Squawk Box " on Friday.
Annualized total volume for DraftKings' predictions platform grew to $11 billion from $2.3 billion between April and July, Robins said on the company's earnings call Friday morning.
He added that other prediction markets have not disturbed DratftKings' business because it caters to a different audience.
"We continue to see only about 1% customer overlap between our sportsbook and the largest prediction market operator in sportsbook states, which tells us these platforms are driving a fundamentally different and largely professional audience," he said.
DraftKing's internal data estimates 80% to 90% of prediction market consumer volume comes from betting syndicates and institutional traders, Robins said during the call.
Owning three key layers of prediction markets — brokerage, exchange and market maker — gives the company an edge against its competitors, Robins added.
DraftKings' second quarter adjusted EBITDA of $114.6 million and revenue of $1.44 billion fell short of the FactSet consensus call for $156.1 million in EBITDA and $1.51 billion in revenue.
In addition, Flutter said on Wednesday it would move its FanDuel Predicts sports and novelty contracts from CME to Crypto.com. CME will continue to provide financial market contracts, the company said.
"This new exchange arrangement will ensure we can deliver new products at pace ahead of the NFL season start," Jackson said on the company's earnings call . The operator first launched FanDuel Predicts with CME in December 2025, just a few months after volume for platforms like Kalshi and Polymarket soared.
Regulation is also top of mind for Flutter as Kalshi and Polymarket have been subject to scrutiny from state regulators arguing the companies are operating illegal gambling platforms .
More than 40 state attorneys general have also pushed back on the Commodity Futures Trading Commission's assertion that it's the exclusive regulator of sports-related event contracts.
Jackson said that FanDuel Predicts has a smoother pathway operating in states.
"Our own prediction market offering FanDuel Predicts allows us to acquire customers ahead of sports betting regulation in new states," he said on the call.
Flutter posted second quarter adjusted earnings of 49 cents per share on revenue of $4.33 billion, versus the FactSet consensus call for 54 cents per share and $4.23 billion. It expects to generate about $50 million in market-making revenue this year.
Crypto exchange platform operator Coinbase said in late July that its prediction markets revenue grew 106% on a quarter over quarter basis, and that annualized revenue from this business in the second quarter surpassed $100 million.
Some analysts were not impressed by those numbers.
"Prediction markets run rate of $100M+ in 2Q was below our estimate," KeyBanc analysts wrote in a report after Coinbase posted quarterly results.
Coinbase reported disappointing results for the second quarter, posting a wider-than-anticipated loss of $1.36 per share, versus the 17-cent loss per share analysts polled by LSEG had sought. Revenue also fell short of expectations, coming in at $1.2 billion versus the $1.3 billion forecast.
Robinhood launched Rothera in June, an exchange that's licensed with the CFTC and managed through the brokerage's joint venture with Susquehanna International Group. In its second quarter report , Robinhood said that over 3.5 billion contracts had been traded to date.
Event contracts revenue came in at $156 million in the second quarter, according to Robinhood.
"In less than two months since launch, we took approximately 7-8% of total market share among CFTC-regulated venues and roughly 30% average market share in the specific contracts we listed," Rothera's founders Tom Chippas and Matt Trudeau wrote in a LinkedIn post on Aug. 4.
The founders also highlighted the volume numbers as "evidence" that its "technology and operations can perform under sustained pressure at significant scale."
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.
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