FanDuel Explores Deal with Kalshi for Prediction Markets

FanDuel and Kalshi may be on the verge of teaming up, according to a report from Front Office Sports. The two companies have reportedly discussed a partnership that could expand FanDuel’s reach and push the boundaries of regulated prediction markets in the United States.

Good to know

• Kalshi operates in all 50 states and is regulated federally, not by individual states.
• FanDuel runs in 25 states and has avoided legal risks tied to unregulated markets.
• Some states and industry groups are already challenging Kalshi’s operations.

FanDuel’s parent company, Flutter, has shown growing interest in event-based trading. CEO Peter Jackson said in May the firm was “interested in the potential opportunity” to launch a prediction market, noting Flutter’s successful experience with Betfair in Europe.

A deal with Kalshi could allow FanDuel to tap into states like Texas and California, where sports betting is not yet legal. Since Kalshi is regulated by the Commodity Futures Trading Commission (CFTC), it bypasses state-level restrictions.

Unlike sportsbooks, Kalshi offers contracts based on simple outcomes, such as “yes or no” results, without traditional odds or spreads. FanDuel could potentially bring more liquidity and complexity to these markets.

Kalshi made headlines after winning court approval to offer contracts tied to the 2024 U.S. Election. The platform later began offering sports-related contracts and partnered with Robinhood to boost its user base.

The expansion into sports markets has included NBA, MLB, NHL, college basketball, and even golf and UFC events.

Not everyone in the gambling industry is happy about Kalshi’s rise. Regulators in states like Nevada, Maryland, and New Jersey have sent cease-and-desist letters to the platform. Kalshi has responded with lawsuits, arguing that only the CFTC has authority over its operations.

“We are literally like a financial exchange, but the underlying trading is events,” said Kalshi founder Tarek Mansour. “The CFTC is our regulator.”

Groups like the American Gaming Association have warned that these types of contracts could raise public issues. Though the AGA has not taken a firm stance, it has described event-based prediction markets as “problematic.”