Not surprisingly, both DraftKings and FanDuel fielded questions on Q1 calls about the impact of prediction market exchange Kalshi, which continues to expand its menu to offer contracts on events across sports.
DraftKings CEO Jason Robins said Kalshi’s growth, and the buzz surrounding it, has gotten the attention of lawmakers in states that have not yet legalized sports betting.
“It’s definitely something that [state legislators] are talking about,” Robins said. “It’s early days, so it’s hard to say at this point that it has really catalyzed anything because we haven’t seen any states that are, like, ‘yeah, we’re going to do this now.’ But step one is getting their attention and making them start having those conversations. We are seeing that happen. And as it continues to grow, that’s going to be a powerful lever that, ‘this is happening whether you want it to or not. So do you want to do it in a way that ... allows you to prosper, or do you want to watch it happen somewhere else?’ That’s something that everybody is talking about right now.”
Flutter CEO Peter Jackson pointed to the company’s experience running London-based exchange BetFair. He said the company would be “quite thoughtful” about how an exchange product that couldn’t offer parlays would fit in a U.S. market that favors those.
“For existing states where sports betting is allowed,” he said, “I’m not that confident that this will have a significant impact.”
The more intriguing option is in states that haven’t yet legalized. Both FanDuel and DraftKings are studying entering some of those through a predictions product, as well as through pick ‘em apps similar to PrizePicks and Underdog. Both are testing peer-to-peer pick ‘em games in a few states.
“Look, we’re interested in the potential opportunity,” Jackson said. “We have brought some of our team who have experience in building these products and services from the Betfair Exchange business and put them into FanDuel to help us evaluate the opportunity. So, we’re working through it. Clearly, in states that haven’t regulated, there’s a sort of prime the pump type of opportunity that is not that dissimilar to some of the DFS stuff.
“If there is any benefit that we get from prediction markets encouraging faster rollout, we’ll take it, right? We would love to make our product available more broadly to more customers.”
