They are saying that the home all the time wins, however what occurs when bettors’ swap their bets for trades? One-time pandemic favorites DraftKings (DKNG) and FanDuel mother or father Flutter Leisure FLUT is likely to be about to search out out.
The rise of prediction markets are in charge. On Tuesday, the 2 playing apps noticed their shares sink 11% and 10%, respectively. It got here as prediction market chief Kalshi launched parlays and shut ally Robinhood (HOOD) introduced a major milestone in its prediction market product.
Why Are Prediction Markets Booming?
This information would not be such a giant risk with the prediction markets of previous. Years again, regulated platforms like PredictIt provided occasions contracts for political and financial happenings, with hefty restrictions on guess dimension. These stored the markets obscure, at the same time as crypto-first companies like Polymarket muscled into the house.
However in the previous couple of years, after regulators on the CFTC authorized Kalshi to function their very own Designated Contract Market (DCM), the occasion contract house has begun to place itself as a extra approachable different to playing incumbents.
It isn’t solely as a result of they’re federally regulated, and due to this fact authorized in all 50 states, however as a result of they’re cheaper and seen as extra clear, too.
And whereas new entrants like Interactive Brokers IBKR have caught with the markets’ political, financial, and monetary roots, the markets have expanded to extra classes like tradition and sports activities. It might turn into more and more existential for betting apps.
Kalshi Launches Parlays
On Tuesday, coinciding with Robinhood’s bullish commentary on prediction markets, Kalshi introduced that it will launch parlays, bulldozing one key benefit that on-line sportsbooks boasted over prediction markets.
Parlays permit bettors to guess on quite a lot of issues taking place directly, typically in change for a bigger payoff. Gamblers are inclined to put collectively customized parlays for longshot bets, typically within the hopes of turning a couple of dollars into a whole lot and even hundreds of {dollars}.
It is notably troubling for betting apps as a result of NFL video games now command over half of Kalshi’s quantity. And with bets on the app already cheaper than the ‘vig’, or charges, of sportsbooks, cheaper parlays might turn into a severe headache for betting gamers.
Robinhood Hits 4 Billion Contracts
In August, we reached out to Robinhood about their new occasions contract product, which launched in November. The app gives a frontend to interface with Kalshi, the regulated change which now gives parlays.
The corporate advised us that, from Nov. 2024 to Jun. 2025, it had transacted over 2 billion transactions. 500 million had been solid on the 2024 U.S. Presidential Election, whereas 100 million had been solid on financial contracts.
Nevertheless, sports activities took the cake, revealing a giant growth of the brokerage app’s investor focus. A shocking 1.4 billion contracts, or 70% of the corporate’s life-to-date contracts on the finish of Q2, got here from sporting occasions like March Insanity and the NHL Finals.
That progress has solely continued, with Robinhood saying that it transacted 2 billion contracts within the third quarter, doubling the variety of complete contracts it had transacted since its Nov. 2024 launch. And with a $0.01 fee on every contract, Robinhood has collected greater than $40 million in income simply delivering trades to the Kalshi market.
The New Playing Apps
Kalshi, Robinhood, Polymarket, and different markets preserve that they aren’t playing apps. They are saying they promote monetary merchandise, which may permit traders to invest on financial, monetary, or political eventualities. It may even permit traders to hedge outcomes.
However realistically, their present suite of merchandise aren’t probably used like that by the thousands and thousands of customers tinkering with prediction markets. As an alternative, their forays into sports activities and cultural occasions might signify a usurping of present playing conference. Nevertheless, that assumes that sure contracts should not restricted by state-specific authorized challenges.
Both means you narrow it although, it comes at a troubling time for casinos, sportsbooks, and different betting apps. Other than the truth that the federally-regulated markets are cheaper, seen as extra clear, and have the added plus of being ‘regulated’, avid bettors will see steeper taxes on their winnings due to the brand new Republican tax and finances invoice.
That could possibly be unhealthy information for the broader sports activities trade, which has solid bets of their very own on sportsbooks and playing apps. The integrations are overbearing with main sports activities leagues, partly as a result of the sponsorship income is significant. And the urgency with which sports activities networks have pushed the speculative exercise as a part of ‘sports activities tradition’ has been credited with the ‘enshittification’ of sportsgoing.
It stays to be seen how huge the disruptiveness of prediction markets could possibly be. However traders are clearly laying out their early bets: the home may all the time win, however the home itself is likely to be altering, even when slowly.
