Truist Securities experts shared careful but positive thoughts on DraftKings’ new prediction markets platform launch. They called this move important for strategy but legally unclear.

DraftKings released its separate DraftKings Predictions app in 38 states on 19 December. This launch greatly increases the company’s possible reach. It adds access to about 30% of the US population through sports event contracts in areas where regular online sports betting remains illegal.

The platform works under the Commodity Futures Trading Commission watch, not state gaming controllers. It offers contracts linked to sports and money results. More categories, like entertainment and culture, will come later.

Truist experts think DraftKings moves forward with the launch without putting the main state gaming licenses in too much danger. They expect competitors to think the same way.

Flutter Entertainment, FanDuel’s parent company, will likely bring a competing product soon. FanDuel had not launched the prediction markets app when the analysis happened. Experts first expected it to move before DraftKings.

Fanatics, a private operator, brought its own prediction offering in 24 states earlier this month.

Legal uncertainty remains a key factor affecting the outlook. Many court cases continue between states and prediction market operators. This creates a broken regulatory landscape.

Truist expects this issue to continue. A possible US Supreme Court review seems reasonable but not likely before mid-2026.

A federal legislative solution seems less possible. Experts called this a puzzle for investors. They must balance the innovation push against the risks of bad legal outcomes.

Three Wide Prediction Market Situations Were Found

Sports contracts might get legal clarity and stay allowed. DraftKings and FanDuel could become top players. This might speed up broader online sports betting legalisation in more states. Even iGaming could expand.

Sports contracts might get banned. Both companies would return to their established online sportsbook control. This would limit prediction market loss exposure if no big fines or regulatory punishments happen.

A third situation sees long uncertainty. Alternative platforms like Kalshi, Robinhood, and Coinbase could gain market share because of wider state access.

DraftKings plans to connect its prediction product to multiple exchanges, starting with CME Group. The company will use its own Railbird technology to expand market offerings and improve long-term financial results.

DraftKings extended its responsible gaming framework to prediction markets. This focuses on user education, deposit limits, and self-exclusion tools.

Trust experts gave updates on the main online sportsbook business beyond prediction markets. They noted a meaningful improvement in operating conditions during the fourth quarter.

Sporting outcomes became more helpful for operators after a difficult NFL season start. Handle stays strong despite worries about possible harm from prediction products.

October handle and gross gaming revenue grew about 15% and 50% year-on-year. Higher hold rates supported this growth.

November data showed continued strength. Early December numbers from New York showed a sharp year-on-year revenue increase.

Holiday period key events included Thanksgiving and Black Friday NFL games. These helped operators because underdogs won.

December events like major boxing matches and Christmas Day NFL games also mattered. Experts compared these results with the bad NFL outcomes from last year. This highlighted a notable shift in operator profits.

Lower Long-Term Earnings Expectations

The firm kept its fourth-quarter EBITDA estimate at the company guidance midpoint for DraftKings. But it lowered the 2026 and 2027 projections by 22% and 18%.

These changes reflect more careful assumptions about betting holds. They also include extra costs from prediction markets and media partnership expenses.

Similar but smaller cuts applied to Flutter’s long-term outlook. Price targets dropped to $43 for DraftKings and $280 for Flutter. Buy ratings stayed on both stocks.

Early adoption numbers suggest prediction markets gain interest but stay behind established competitors.

Citizens’ Jordan Bender tracks early performance data. DraftKings Predict app got roughly 16,000 downloads during the first two days of availability, Friday and Saturday.

This number trailed Kalshi, which recorded about 167,000 downloads over the same period. Fanatics posted approximately 900.

High-profile fights and the college football playoffs opening round drove a big customer acquisition wave. Download activity reached its highest levels for both DraftKings and FanDuel sportsbooks since the NFL season opening week.

Kalshi experienced the strongest download volume on record outside the 2024 election cycle.