Flutter CEO: ‘Limited Cannibalization’ from Prediction Markets in Legal Sports Betting States

The death of the U.S. online sports betting industry at the hands of prediction markets is likely hyperbole and Flutter Entertainment (NYSE: FLUT) CEO Peter Jackson has the receipts to prove it.

Along with Flutter CFO Rob Coldrake, Jackson participated in a conversation with Oppenheimer analyst Jed Kelly earlier today. Jackson, who announced his departure from the FanDuel parent last week, said that in the prediction market vs. sportsbook competition, it’s important “to distinguish between” what’s going on in states that permit internet sports wagering and those that don’t.

“Clearly, in the states where there isn’t (regulated online sports betting), prediction markets have a free run. There’s no competitor to them other than the illegal bookies,” Jackson told Kelly.

States where online sports wagering isn’t legal include California and Texas — the industry’s proverbial golden geese. Some data points indicate sports event contract volume is high in those states, implying sportsbook operators are at risk of lost market share.

Jackson Believes Sports Betting Is the Better Product

While FanDuel has prediction market exposure through its FanDuel Predicts business, it offers sports event contracts only in the states in which it’s not licensed to offer online sports wagering.

Overall, Jackson sees “limited cannibalization” from yes/no exchanges in states where internet sports wagering is legal, telling Kelly that Flutter’s competitors are researching the situation just as the FanDuel owner “and they’re coming to the same conclusions.” In Jackson’s view, the lack of encroachment by prediction markets in legal sports betting states is easily explained: Sports betting is the superior product.

“All the data we look at in the regulated states, we’re seeing very limited cannibalization. And it makes sense because the sports offering on a regulated online sportsbook is better than you can find on the prediction markets,” Jackson told the analyst. “And it’s better in terms of the breadth of markets, but also we offer generosity.”

That perspective jibes with previous sell-side research indicating that in legal sports wagering states when bettors are able to choose between prediction markets and sportsbooks such as DraftKings and FanDuel, they frequently opt for the latter.

Flutter Still Betting Big on Sports Wagering

While FanDuel Predicts is considered a credible, rising player in the yes/no space, Flutter remains committed to sports betting in the U.S. and is spending $270 million to that effect in the second half of this year. Those expenditures will weigh on the operator’s 2026 earnings before interest, taxes, depreciation and amortization — news that unnerved some investors.

However, the investments in U.S. sports betting could pay long-term dividends and Coldrake told Kelly Flutter won’t be engaging in that level of spending into “perpetuity.”

“This is about focusing on the longer-term U.S. opportunity, which we still think is very substantial for us, and that’s a lot more important than maximizing short-term EBITDA, and that’s why we’re willing to make this investment,” said the financial boss to the Oppenheimer analyst.