FanDuel joins prediction markets several days after DraftKings DKNG +3.33% announced similar plans. Wednesday brought news that the sports betting company will launch FanDuel Predicts in December. CME Group CME +0.27% partners with Flutter FLUT +1.12% to create this stand-alone prediction market application. Flutter shares dropped 1% in after-hours trading at 5 p.m. ET.

FanDuel Predicts will provide event contracts covering stock index funds and economic data. Commodities and sporting events also appear on the platform according to the joint announcement. August marked the month when Flutter and CME initially revealed their partnership agreement. Kalshi and other prediction market companies created problems for gambling businesses throughout 2024. DraftKings and Flutter shares suffered because sports event contracts worried investors.

Event Contracts Classified as Financial Instruments Under Federal Oversight

Event contracts function as financial instruments under the Commodity Futures Trading Commission federal regulations. Nationwide legality applies to these contracts without state gambling tax requirements. Sporting event outcome contracts mirror sports betting despite different regulatory frameworks. DraftKings unveiled DraftKings Predictions last week as its prediction market platform. Sport event contracts will feature on this new service.

Both companies adopt identical strategies for sports event contract distribution. States with legal online sports betting won’t receive these offerings from either operator. Sportsbook businesses and state gambling regulators’ relationships need protection from potential conflicts. FanDuel and CME explained that customers can trade sporting event contracts in specific locations. States without online sports betting allow these trades for customers outside tribal lands.

Prediction Markets Push Policymakers Toward Sports Betting Legislation

Jason Robins discussed how prediction markets pressure policymakers during last week’s comments. States watching growth might follow other regions by passing sports betting legislation. FanDuel stated that it will stop offering sports event contracts when states legalise betting. New online sports betting laws trigger immediate cessation of these contract offerings.

Robins mentioned that prediction markets help control state gambling taxes during earnings discussions. Operators might switch to prediction markets when taxes become excessive. Chris Grove from Eilers & Krejcik Gaming believes prediction markets restart sports betting conversations. States without sports betting face unclear paths toward authorisation despite renewed discussions.