Prediction Markets Surge into the Spotlight as Major Platforms Report Quarterly Earnings

The latest quarterly earnings reports from industry giants like FanDuel parent Flutter Entertainment, DraftKings, and others have cast a bright light on the rapidly expanding prediction markets industry.

Joel Shulman, CEO of investment firm Entrepreneur Shares, notes a significant trend: an increasing number of companies are either launching their own prediction market platforms or forging strategic partnerships within this dynamic space. As competition intensifies, these recent earnings provide crucial insights into the substantial investments companies are willing to make in their prediction platforms.

DraftKings' Platform Experiences 'Faster Than Expected' Growth

DraftKings CEO Jason Robins revealed that the company’s prediction market platform, launched in December 2025, is experiencing phenomenal growth. "We had over 600,000 customers so far engaged with our predictions offering, and that's just going to explode this NFL season. I'm expecting millions, so we're excited about it," Robins told CNBC's "Squawk Box" on Friday.

Robins further elaborated on the company's earnings call, stating that the annualized total volume for DraftKings' predictions platform soared from $2.3 billion to $11 billion between April and July. He emphasized that other prediction markets haven't adversely impacted DraftKings' operations because it caters to a distinct audience.

"We continue to see only about 1% customer overlap between our sportsbook and the largest prediction market operator in sportsbook states, which tells us these platforms are driving a fundamentally different and largely professional audience," Robins explained. DraftKings' internal data suggests that 80% to 90% of prediction market consumer volume originates from betting syndicates and institutional traders.

Robins also highlighted DraftKings' strategic advantage: owning three critical layers of prediction markets—brokerage, exchange, and market maker—which provides a significant edge over competitors. Despite this impressive growth in prediction markets, DraftKings' second-quarter adjusted EBITDA of $114.6 million and revenue of $1.44 billion both fell short of FactSet's consensus estimates of $156.1 million in EBITDA and $1.51 billion in revenue.

FanDuel Predicts Shifts from CME to Crypto.com

Shares of Flutter closed down more than 11% on Wednesday following the announcement that Dan Taylor, CEO of Flutter's international division, would succeed Peter Jackson as the company's head. The second-quarter earnings reported that day also missed Wall Street's expectations.

Additionally, Flutter announced a significant strategic move: it will transition its FanDuel Predicts sports and novelty contracts from CME to Crypto.com. CME will continue to handle financial market contracts for the company.

Former CEO Peter Jackson commented on the change, stating, "This new exchange arrangement will ensure we can deliver new products at pace ahead of the NFL season start." FanDuel Predicts initially launched with CME in December 2025, a period when platforms like Kalshi and Polymarket saw soaring volumes.

Regulation remains a key concern for Flutter, as platforms like Kalshi and Polymarket have faced scrutiny from state regulators who argue they operate as illegal gambling platforms. More than 40 state attorneys general have also challenged the Commodity Futures Trading Commission's assertion of exclusive regulatory authority over sports-related event contracts.

Jackson noted that FanDuel Predicts benefits from a smoother operational pathway in various states. "Our own prediction market offering FanDuel Predicts allows us to acquire customers ahead of sports betting regulation in new states," he said. Flutter reported second-quarter adjusted earnings of 49 cents per share on revenue of $4.33 billion, missing FactSet's consensus of 54 cents per share and $4.23 billion. The company anticipates generating approximately $50 million in market-making revenue this year.

Coinbase Signals Prediction Market Expansion

Crypto exchange operator Coinbase announced in late July that its prediction markets revenue surged by 106% on a quarter-over-quarter basis, with annualized revenue from this segment surpassing $100 million in the second quarter. However, these figures did not impress all analysts.

"Prediction markets run rate of $100M+ in 2Q was below our estimate," KeyBanc analysts noted in a report following Coinbase's quarterly results. Coinbase itself reported disappointing overall second-quarter results, posting a wider-than-anticipated loss of $1.36 per share, against the 17-cent loss per share expected by LSEG-polled analysts. Revenue also fell short, coming in at $1.2 billion compared to the $1.3 billion forecast.

Robinhood's Rothera Rollout Makes Its Mark

In June, Robinhood launched Rothera, an exchange licensed with the CFTC and managed through a joint venture with Susquehanna International Group. Robinhood's second-quarter report indicated that over 3.5 billion contracts have been traded on Rothera to date.

Event contracts revenue for Robinhood came in at an impressive $156 million in the second quarter. Rothera's founders, Tom Chippas and Matt Trudeau, highlighted the exchange's rapid ascent in a LinkedIn post on August 4: "In less than two months since launch, we took approximately 7-8% of total market share among CFTC-regulated venues and roughly 30% average market share compared with the largest market in the specific contracts we listed."

The founders pointed to these volume numbers as "evidence" that their "technology and operations can perform under sustained pressure at significant scale."

Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.