FanDuel’s shock move into prediction markets could see the company gain a first-mover advantage over its rival operators. 

The US operator announced on 21 August that it is set to offer access to event-based contracts through a new partnership, which could launch later this year.

Crucially, the platform is unlikely to include sports, one of the areas that firms like Kalshi have stood out for offering – but it is still a potential step towards Flutter Entertainment’s US brand entering the rapidly growing US events contracts market. 

SBC Media Manager Charlie Horner was joined by SBC Managing Editor, Jessica Welman, and SBC Americas Senior Journalist, Tom Nightingale, to discuss FanDuel’s partnership with the derivatives marketplace CME Group and how it will affect its new move.

FanDuel primed for success?

Entering in the market with a ready-made platform such as CME could give FanDuel a strong foundation for success in this area. 

However, it could be joined by an industry rival in the future as DraftKings CEO Jason Robins recently discussed prediction markets in an earnings call, making this move even more important. 

Wellman said: “FanDuel has the reputation and the pedigree, the blue chip status that somebody like a CME is willing to take that step with them.

“It’s the game everybody wants in – it’s step 3000. Nobody wants it at step one. 

“The biggest advantage is it gives them a massive headstart over everybody else to get a group that already has their ducks in a row.”

Nightingale agreed, adding: “The reputation of the CME group and the fact that this is a kind of ready-made platform for a company that is already the US market leading sportsbook to jump in with both feet.”

Blurring the lines between gaming and finance

Customers will be able to trade “yes/no” predictions for as little as $1 and markets will include the likes of the S&P 500, prices of oil and gas, gold, cryptocurrencies and key economic indicators such as the Gross Domestic Product and Consumer Price Index.

As mentioned, sports betting wasn’t addressed in the release from last week’s announcement but the entire concept of prediction markets with a sportsbook is likely to translate into that in the future. 

Nightingale said: “If it walks like sports betting and it talks like sports betting, it’s sports betting.”

He backed the idea that sports predictions will be something we will see in the future under the FanDuel umbrella.

“They’ll form a new joint venture company, but it sounds like they’ll sort of integrate it through the FanDuel platform. 

“You can get access to this marketplace and offer trading on financials. Currently they offer no sports, but let’s just put a pin in that and not pretend that this isn’t something that they’ve seriously considered for the future.”