FanDuel's prediction market initiative, FanDuel Predicts, a 49% owned venture with CME Group (51% owned by CME), is facing considerable financial headwinds and market share challenges. The company anticipates a loss of $40 million to $50 million in adjusted EBITDA for prediction markets in 2025, escalating to $200 million to $250 million in 2026. This performance is in stark contrast to expectations, as the product has only generated around $15,000 per day in fee revenue, even if it accounted for 100% of CME's volume, while market leader Kalshi earns upwards of $4 million daily.
The venture's struggle is evident in its low trading volume. Data indicates that CME's exchange, which hosts all of FanDuel's prediction market contracts, typically reports only around $1.5 million in daily volume. This pales in comparison to the hundreds of millions in volume seen on Kalshi. A Bank of America analysis further highlights CME's minimal presence, attributing a 0% market share to CME in the US-regulated event contract market, while Kalshi dominates with a 91% share. FanDuel's parent company, Flutter Entertainment Plc, has seen its value drop by some $30 billion since August, partly due to being late to the prediction market sector.
Recouping these losses appears to be a long-term challenge. Analysts project that FanDuel would need to process around $66 billion in volume in 2027 just to cover its initial losses. This figure is significantly higher than the projected total volume for CFTC-registered prediction markets across the entire U.S. in 2025, which is estimated between $20 billion and $25 billion, with Kalshi accounting for the vast majority. FanDuel's fee structure of one cent per dollar traded, while competitive with Kalshi's average 1.2% fee, is notably higher than Polymarket's when it re-launches in the U.S. FanDuel has also recently registered a new interest in prediction market contracts without CME involvement, indicating a potential strategic shift.
Despite the current struggles, FanDuel expects spending on prediction markets to be in the $250-$300 million range in 2026, after spending $50 million in 2025. Flutter's CEO, Jackson, has stated that the company "reserves the right" to increase this spending if the product demonstrates positive results, though no prediction market revenue is currently included in its 2026 projections. The company faces a difficult path to profitability, with a payback period for its prediction market investments likely extending beyond 2028.
