The Tremendous Bowl is meant to be the spotlight of the calendar for playing firms. This 12 months, although, a cloud has descended over the trade as the large sport approached.
The inventory of Flutter Leisure Plc, which runs some of the in style US playing apps, FanDuel, is on an eight week skid, the longest in 23 years. It’s primary competitor, DraftKings, is buying and selling across the lowest ranges since 2023, and is down greater than 60% from its all-time excessive 5 years in the past.
The matchup between Seattle-New England — with much less superstar attraction than final 12 months’s Taylor Swift-soaked occasion — is partly in charge. However the greater concern hanging over the trade is the rise of prediction markets like Kalshi, which have come out of nowhere over the past 12 months to supply a brand new approach to wager on sports activities, bypassing the state-level playing laws which have restricted the unfold of older playing apps.
Jordan Bender, senior fairness analyst at Residents, is anticipating report breaking buying and selling volumes on prediction markets this weekend on the identical time that authorized wagering on conventional sportsbooks — or deal with as it’s recognized — falls 2% from final 12 months.
“A big piece of why we think Super Bowl handle will be down is that prediction markets are taking a bite out of that,” Bender stated.
It’s fairly the reversal of fortunes for playing firms that appeared to be using to ever larger heights lately because the American obsession with playing took off within the wake of a Supreme Court docket choice in 2018 that allowed states to legalize sports activities betting. The quantity wagered on the Tremendous Bowl has grown for eight years straight.
The menace to those companies got here from an surprising route. Till early final 12 months, Kalshi, the main US prediction market startup, was utilizing its standing as a federally regulated monetary alternate to supply area of interest monetary contracts tied to popular culture occasions and elections. The company overseeing all this, the Commodity Futures Buying and selling Fee, had indicated that so-called occasion contracts tied to sports activities had been off limits.
Then Donald Trump gained the election. Kalshi examined the waters by providing its first wagers on the Tremendous Bowl in early 2025 and the CFTC didn’t step in to cease them. These first contracts had been little greater than an experiment, however sports activities have since come to account for greater than 90% of the buying and selling quantity on Kalshi.
A number of trade analysts nonetheless count on the present US sportsbooks to absorb a report Tremendous Bowl haul this 12 months. Ed Birkin, a senior analyst with H2 Playing Capital, is forecasting that whole wagers — earlier than prediction markets are taken under consideration — will leap 9% from final 12 months, to $1.78 billion. However stated he expects prediction markets will appeal to $630 million in bets for the Tremendous Bowl and account for 80% of the year-over-year progress in wagering exercise for the occasion.
Wall Road analysts’ common fourth-quarter adjusted earnings per share estimate for Flutter have plunged a whopping 49% over the previous three months, based on information compiled by Bloomberg, whereas income expectations have taken a 6.3% hit. For DraftKings, earnings estimates are down 29% whereas income projections have fallen 2.6% in the identical interval.
Some playing executives have stated that prediction markets will not be threatening them in states the place they’re already working and are as a substitute primarily gaining floor within the dozen or so states the place conventional on-line playing just isn’t allowed, together with massive ones like California and Texas.
BetMGM, which has its personal on-line sports activities app, introduced this week that it attracted report sports activities bets within the fourth quarter of 2024, serving to drive a 63% leap in revenues from a 12 months earlier.
“We can’t see any impact that we can identify that is attributable to prediction markets,” the corporate’s chief govt officer, Adam Greenblatt, stated in an interview.
Greenblatt stated the newcomers have additionally drawn a lot of their enterprise from the extra expert bettors — often called sharps — who are typically much less worthwhile for playing firms.
Learn Extra: Playing Professionals Regulate to a Tremendous Bowl on the Prediction Markets
Older playing apps, in the meantime, are operating up towards the bounds of their growth throughout the nation, after the fast progress that instantly adopted the Supreme Court docket choice. This 12 months, the one new state to permit authorized betting on the Tremendous Bowl is Missouri, a comparatively small market.
“The Super Bowl 60 outlook reflects a transition from expansion-driven growth to incremental growth as nearly all states with a viable path to legalization are already live,” Benchmark analyst Mike Hickey wrote in a observe to purchasers on Jan. 29.
Nonetheless, even in states the place playing has been authorized — the strongholds of DraftKings and FanDuel — there have been indicators of weak spot. Round 10% of DraftKings customers had been additionally utilizing Kalshi in January, and Kalshi’s app was downloaded 4 occasions as a lot as both FanDuel or DraftKings, based on the info agency Apptopia.
A part of the attract of Kalshi is that it’s utilizing its novel construction to open up betting on every part from the size of the half time present to the probability of Jeff Bezos attending the occasion, whereas DraftKings and FanDuel are virtually completely centered on the scoring and end result of the sport.
“Kalshi’s growth is fueled by ad campaigns, earned media, social virality and, above all, superior depth, breadth, and distribution compared to traditional online sportsbooks,” analyst Edwin Dorsey wrote in considered one of a number of current posts on Substack about why he’s bearish on DraftKings.
DraftKings and FanDuel have been taking the menace critically. In December they each launched their very own prediction market apps, which are actually accessible in all of the states the place their conventional apps will not be allowed. However collectively they obtained just below 100,000 downloads in January, in contrast with Kalshi’s 1.9 million downloads, based on Sensor Tower information.
On Friday, DraftKings introduced that it had struck a partnership with one other early prediction market alternate, Crypto.com, to supply a wider array of occasion contracts.
Gaming regulators in a number of states have gone to court docket to attempt to shut Kalshi and its friends down, and lots of analysts assume these circumstances will finally go to the Supreme Court docket. However within the meantime, the brand new chair of the CFTC, Michael Selig, not too long ago indicated that he’ll permit sports activities contracts to maneuver ahead and isn’t planning to cede oversight of the territory to the states.
