Gambling stocks plummet as prediction markets steal Super Bowl bets

Traditional sportsbooks face new competition from unregulated prediction markets

Published on Feb. 8, 2026

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The Super Bowl is typically a highlight for gambling companies, but this year a new threat has emerged in the form of prediction markets like Kalshi. These unregulated platforms are offering a wider array of bets on the big game, stealing market share from established sportsbooks like FanDuel and DraftKings. As a result, gambling stocks have plunged, with Flutter Entertainment and DraftKings down significantly from their highs.

Why it matters

The rise of prediction markets poses a major challenge to the traditional sports betting industry, which has seen rapid growth since the Supreme Court legalized sports gambling in 2018. These new platforms are operating in a legal gray area, offering bets that sportsbooks are prohibited from taking due to state-level regulations. This is disrupting the business models of major gambling companies and threatening their dominance.

The details

Prediction markets like Kalshi have quickly gained traction, accounting for an estimated $630 million in Super Bowl bets this year - about 80% of the year-over-year growth in wagering. Meanwhile, sportsbook handle is expected to decline slightly. Gambling executives argue prediction markets are primarily gaining ground in states where traditional online betting is not allowed, but data shows Kalshi is also attracting bettors in regulated markets. Gambling stocks have plummeted as a result, with Flutter Entertainment and DraftKings down sharply from their highs.

  • The Supreme Court legalized sports betting in 2018, leading to rapid growth for sportsbooks.
  • Kalshi first offered Super Bowl bets in early 2025, testing the waters with the CFTC.
  • Sports betting now accounts for over 90% of Kalshi's trading volume.

The players

Kalshi

A leading US prediction market startup that has emerged as a major competitor to traditional sportsbooks.

FanDuel

A popular US gambling app owned by Flutter Entertainment, one of the major players in the sports betting industry.

DraftKings

A major competitor to FanDuel in the sports betting market, which has also seen its stock price plummet.

Michael Selig

The new chair of the Commodity Futures Trading Commission, which regulates prediction markets.

Adam Greenblatt

The CEO of BetMGM, a major online sports betting app that claims to be unaffected by prediction market competition.

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What they’re saying

“'We can't see any impact that we can identify that is attributable to prediction markets.'”

— Adam Greenblatt, CEO, BetMGM (dnyuz.com)

“'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.'”

— Edwin Dorsey, Analyst (Substack)

What’s next

Gaming regulators in several states have gone to court to try to shut down prediction markets like Kalshi, and many analysts assume these cases will eventually go to the Supreme Court. In the meantime, the new chair of the CFTC, Michael Selig, has indicated he will allow sports contracts to move forward and is not planning to cede oversight to the states.

The takeaway

The rise of prediction markets represents a major disruption to the traditional sports betting industry, forcing established players like FanDuel and DraftKings to adapt to a new competitive landscape. This shift is having a significant impact on gambling stocks, highlighting the industry's vulnerability to innovative new platforms that can bypass existing regulations.