The expected post-Super Bowl confidence boost for traditional betting stocks has failed to materialize following Super Bowl LX, as a new breed of competitors, prediction markets, redefines the industry’s growth trajectory.
While H2 Gambling Capital projected a robust regulated handle of $1.78 billion, including a $172 million contribution from New York, the narrative has shifted from sportsbook dominance to the rise of federally regulated derivatives platforms.
The Rise of Prediction Markets
Bloomberg reports that Flutter Entertainment (FanDuel) has suffered an eight-week decline, its longest in two decades, while DraftKings hovers near 2023 lows. Investors are increasingly wary of platforms like Kalshi, which offer sports-style contracts via federal derivatives routes rather than state-regulated systems. Analyst Jordan Bender noted that these prediction markets are “taking a bite” out of the Super Bowl handle, which fell approximately 2% year-over-year.
“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.
Slowing Expansion and User Migration
The rapid expansion that previously fueled sportsbook growth has cooled. Missouri was the only new state to offer legal Super Bowl betting this year, signaling a plateau in expansion-led gains. Data suggests a significant user overlap; approximately 10% of DraftKings users also utilized Kalshi in January, with Kalshi’s app downloads outperforming both FanDuel and DraftKings during the same period.
Executive Perspectives
Despite the data, some leaders remain skeptical of the threat. BetMGM CEO Adam Greenblatt noted that newer platforms seem to attract “sharps”, professional bettors that sportsbooks typically avoid.
“I could not identify any impact that could be attributed to prediction markets,” Greenblatt told Bloomberg.
As the industry moves beyond Super Bowl LX, the focus remains on whether prediction markets will continue to absorb the market’s growth or if traditional sportsbooks can pivot to recapture the spotlight.
