Morningstar

DraftKings and Flutter: Online Sports Platforms Face Uncertainty from Predictive Event Competition

It’s unclear whether predictive platforms are expanding the market or taking share from apps like DraftKings and Flutter.

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Securities in This Article
DraftKings Inc Ordinary Shares - Class A
(DKNG)
Flutter Entertainment PLC
(FLUT)

DraftKings DKNG and Flutter Entertainment FLUT shares were down around 10% midday on Sept. 30, as predictive market company Kalshi has reported record sports contract volume in recent days.

Why it matters: Because they are regulated federally versus at the state level, predictive event platforms like Kalshi can operate in states and at ages that online sports apps are unable to. It’s unclear whether predictive platforms are expanding the market or taking share from apps like DraftKings and Flutter.

  • Kalshi’s September volume increased about 3 times the average seen in May through August, with the mix of sports jumping to 90% from three-fourths over the same time. This is a stronger increase than the roughly double that the online sports industry saw in 2024 over the same months.
  • Some of Kalshi’s performance could be attributable to demand in California, Texas, and Florida, where online sports companies aren’t allowed to operate. Also, Kalshi has a minimum age of 18 to buy a sports contract, below the 21 minimum to gamble in most legalized sports betting states.

The bottom line: We are maintaining our fair value estimates for narrow-moat DraftKings and Flutter as we continue to monitor the dynamic industry landscape.

  • Although predictive event sports contracts have been around for several months, DraftKings reported strong second-quarter revenue growth of 37% and raised its 2025 sales guidance to the high end of its prior range.
  • DraftKings and Flutter are also exploring entering the prediction event markets, which could provide them with a growth opportunity to offset or mitigate any risk the industry might present.

Big picture: In our view, prediction event sports contracts and pure online sports betting should be regulated the same to protect younger adults from addiction, if for nothing else, as well as to level the playing field across states.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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