FanDuel, one of the leading U.S. sportsbooks, has reportedly been in discussions with Kalshi, a fast-rising prediction market exchange, about a potential partnership. As prediction markets continue to gain traction, sportsbooks are exploring new ways to stay competitive and expand their reach. 

Since winning its legal battle with the Commodity Futures Trading Commission, Kalshi has ventured into the sports space. In January, the company partnered with Robinhood to launch sports event contracts like futures and single-game moneylines. Though they currently run a simple platform, sources say Kalshi plans to offer advanced products soon, including parlays, point spreads, and player props.

Opportunities for Expansion and Access

A deal with Kalshi offers FanDuel access to markets currently out of reach. Kalshi operates in all 50 U.S. states, while sports betting is only legal in 39 states. That leaves massive untapped markets like Texas and California, two of the biggest potential sources of new revenue. 

The company also allows trading in non-sports topics, such as elections, entertainment outcomes, and cultural predictions. These markets could provide new content and engagement opportunities for FanDuel. In exchange, Kalshi would gain access to FanDuel’s over 12 million users. Some industry insiders suggest this could lead to FanDuel acquiring an equity stake in Kalshi or similar platforms.

Legal Battles and Regulatory Hurdles      

Despite its growth, Kalshi is facing mounting regulatory pressure. Seven states, including Nevada, New Jersey, and Illinois, have issued cease-and-desist orders against Kalshi’s sports offerings. 

However, Kalshi has pushed back with lawsuits and recently got a motion denied in a Nevada court. The company argues that its platform is fundamentally different from traditional betting, as users trade contracts with each other. Also, Kalshi has political allies, such as Donald Trump Jr., who is a strategic advisor, and Brian Quintenz, a board member. These ties have helped Kalshi maintain federal regulatory traction, as state-level challenges continue.

Industry Response and Future Outlook

The rise of Kalshi and similar platforms like Crypto.com has caught the attention of traditional sportsbooks. Executives from leading betting firms, including Flutter Entertainment, FanDuel’s parent company, have publicly acknowledged the opportunity prediction markets represent, even in states currently prohibiting sports betting. 

Prediction platforms are reshaping the industry through user-to-user trading, access to broader markets, and expanding legal momentum. So, many sportsbooks are considering how best to invest in this emerging sector. As regulation evolves, a potential partnership between FanDuel and Kalshi will mark a key turning point in the future of sports betting in the U.S.