The landscape of American forecasting shifted fundamentally this winter as the industry's two largest heavyweights, FanDuel and DraftKings, officially entered the prediction market space. Moving beyond point spreads and over-unders, these legacy sportsbooks have launched dedicated "event contract" platforms—FanDuel Predicts and DraftKings Predictions—to capture a share of the exploding interest in political and economic wagering.
The entry comes as the 2026 midterm election cycle begins to heat up, with markets for House and Senate control already seeing tens of millions in liquidity. While Polymarket dominated the 2024 cycle from offshore and Kalshi fought the legal battles to domesticate the industry, the arrival of the sports betting giants represents a "mass-market moment." Traders are currently pricing the probability of a Republican-held House after the 2026 midterms at roughly 54% on FanDuel Predicts, a figure that has seen a sharp 4% uptick in volatility over the last 48 hours following recent economic data releases.
The Market: What's Being Predicted
The primary products on offer are CFTC-regulated event contracts. Unlike traditional sports bets, which are governed by state-level gaming boards, these markets are structured as financial derivatives. FanDuel, owned by Flutter Entertainment (NYSE: FLUT), launched its platform on December 22, 2025, through a strategic partnership with the CME Group. Meanwhile, DraftKings (Nasdaq: DKNG) fast-tracked its entry by acquiring Railbird Technologies, a CFTC-licensed exchange, for $250 million in late 2025.
These platforms are currently listing a wide array of "Yes/No" binary contracts. While political outcomes—such as the 2026 midterms and early 2028 presidential nominees—are the headline grabbers, the volume is surprisingly high in non-political sectors. Currently, traders are active in markets regarding the Federal Reserve’s March interest rate decision, monthly CPI prints, and even cultural events like the 2026 Academy Award winners.
The liquidity on these platforms is growing at an unprecedented rate. DraftKings Predictions reported a trading volume of over $120 million in its first month, largely due to its integration with the existing DraftKings ecosystem. This allows millions of casual users to shift their "sports bankroll" into event contracts with a single tap. The resolution criteria are strictly tied to verified data sources, such as official government reports or certified election results, ensuring a level of transparency that mirrors traditional financial markets.
Why Traders Are Betting
The sudden migration of capital toward these legacy platforms is driven by a "Trojan horse" strategy. Because event contracts are regulated as derivatives by the Commodity Futures Trading Commission (CFTC), FanDuel and DraftKings are now able to offer "sports-themed" contracts in states where traditional sports betting remains illegal, most notably California and Texas. Traders in these states are flocking to "Predictive Sports" contracts—financial derivatives based on seasonal outcomes rather than individual game lines—which are legally distinct from gambling.
Institutional players and "whales" are also beginning to favor these legacy platforms over crypto-native alternatives like Polymarket due to the ease of fiat on-ramps and the security of US-based regulation. Analysts note that large-scale positions are being taken by hedge funds using these markets as a hedge against political instability. For example, a significant buy-wall has emerged on FanDuel Predicts for "No" on the passage of a controversial federal tax bill, serving as an insurance policy for corporate entities that would be adversely affected by the legislation.
This shift marks a departure from traditional polling and forecasting methods. While legacy pollsters struggled with accuracy in the 2024 cycle, prediction markets provided real-time, skin-in-the-game data that proved more resilient. The sportsbooks are capitalizing on this by marketing their platforms as "The Pulse of the Nation," attracting users who view themselves as armchair analysts rather than gamblers.
Broader Context and Implications
The entry of legacy sportsbooks is a direct result of the legal precedent set by Kalshi in 2024. After Kalshi successfully sued the CFTC to allow election markets, the floodgates opened for any regulated exchange to follow suit. This has led to a major regulatory evolution under the new market-friendly leadership at the CFTC in early 2026, which has pivoted from trying to ban these markets to establishing a robust framework for their operation.
However, this expansion has not been without friction. The ability of FanDuel and DraftKings to operate in California and Texas via the "event contract" loophole has sparked intense legal battles with California gaming tribes. These tribes argue that the sportsbooks are bypassing tribal sovereignty by offering what is functionally gambling under the guise of financial trading. The outcome of these challenges could define the future of the industry for decades.
Historically, the entry of major incumbents into a disruptive space often leads to the "institutionalization" of the asset class. Just as the launch of Bitcoin ETFs by major asset managers signaled a new era for crypto, the entry of Flutter Entertainment and DraftKings has legitimized prediction markets as a mainstream financial tool. This has forced early pioneers like Polymarket to refine their offerings, focusing more on global, decentralized markets that legacy US-regulated firms cannot touch.
What to Watch Next
The most immediate milestone to monitor is the "Super Tuesday" of event markets: the 2026 Midterm Primary season. As candidates are finalized, the volatility in "Control of the House" contracts is expected to spike. If the legacy sportsbooks can maintain high liquidity during this period, it will prove their dominance over the niche, retail-heavy platforms that came before them.
Additionally, keep a close eye on the "2028 Presidential Nomination" markets. Unlike the 2024 cycle, which saw massive volume only in the months leading up to the election, the 2028 markets are already seeing millions in "early bird" trades. DraftKings has hinted at launching a "Candidate Index," a basket of contracts that allows traders to bet on the overall direction of a political party's momentum.
The legal front also remains critical. A pending decision in the California Supreme Court regarding the "Event Contract vs. Gambling" distinction is expected by late spring 2026. A ruling in favor of the sportsbooks could cement their presence in California indefinitely, while an adverse ruling might force a messy withdrawal from one of the world's largest economies.
Bottom Line
The arrival of FanDuel and DraftKings into the prediction market space is the final signal that "betting on the news" has moved from the fringes of the internet to the center of the American economy. By leveraging their massive existing user bases and navigating the complex CFTC regulatory environment, these companies are effectively democratizing sophisticated financial hedging for the average person.
This evolution confirms that prediction markets are more than just a novelty; they are an essential tool for price discovery in an increasingly volatile world. As liquidity continues to pool into these regulated exchanges, the "wisdom of the crowd" becomes more accurate, providing a real-time sentiment gauge that no poll or pundit can match.
For the investor and the trader, the takeaway is clear: the distinction between "sports betting" and "financial trading" is blurring. Whether the market is the final score of a game or the final tally of an election, the underlying mechanism is the same—and the giants of the industry are now the ones setting the odds.
This article is for informational purposes only and does not constitute financial or betting advice. Prediction market participation may be subject to legal restrictions in your jurisdiction.
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