DraftKings, FanDuel Pour $200-300 Million-Plus Into Prediction Markets Ahead of NFL Season

DraftKings and FanDuel are pouring hundreds of millions of dollars into their prediction market platforms ahead of the NFL season, reigniting a customer acquisition battle that the sports betting industry had largely moved past in recent years. The nation’s leading online gaming operators are projecting more than $500 million in combined lost adjusted EBITDA from investing in and marketing their prediction market products alone.

The spending surge comes just as PENN Entertainment CEO Jay Snowden warned that larger competitors are gearing up for “very aggressive, irrational” spending as football season approaches. “We’re anticipating that there could be a bit of an arms race as we head into football season,” Snowden said during his company’s second-quarter earnings call. PENN has notably stayed out of the prediction market space entirely, choosing instead to focus on its brick-and-mortar casino portfolio and profitability in its online gaming division.

DraftKings Leans Into Early Growth

DraftKings’ second-quarter results show why operators are willing to spend big. Customer acquisition rose nearly 75% year over year during the quarter, while sports-consumer volume climbed 15%. The company’s prediction market activity has accelerated even faster, with annualized volume increasing nearly fivefold between April and July. More than 600,000 customers had used DraftKings’ prediction product through the first half of the year, aided by a universal app that automatically routes bettors between its prediction market and sportsbook platform depending on legality in their state.

Perhaps most notable for DraftKings’ investment thesis is what the company says it hasn’t seen: cannibalization. Management reported customer overlap with the leading prediction market operator at roughly 1% in states with legal sports betting, and estimated that 80% to 90% of prediction market volume in sportsbook states comes from professional syndicates and institutional traders rather than the recreational customers who make up the bulk of DraftKings’ traditional sportsbook base.

FanDuel and the Untapped-State Play

Flutter Entertainment, FanDuel’s parent company, is making a similar calculation. The nation’s No. 1 sportsbook operator by market share views its prediction market as a way to acquire customers in states without legal online sportsbooks, potentially building relationships before those states eventually legalize traditional betting. Like DraftKings, Flutter says cannibalization of its core sportsbook business remains limited.

That combination — new customers without meaningfully reduced sportsbook activity — is exactly what’s driving the spending. FanDuel is increasing “customer generosity” within FanDuel Predicts and projects roughly $50 million in 2026 prediction market-making revenue, a sign of how quickly the category has become central to operators’ broader financial strategy. Bettors comparing sportsbook and prediction market options can check the latest FanDuel Promo Code offers as both platforms ramp up promotional activity.

NFL Season Will Be the Real Test

The industry spent billions of dollars acquiring customers during the early years of legal U.S. sports betting before shifting toward promotional discipline and sustained profitability. Prediction markets threaten to reverse that shift. DraftKings and FanDuel, which combined control more than two-thirds of the U.S. sports betting market, only recently reached consistent profitability after years of steep losses — but nationwide prediction market leader Kalshi has forced them to pivot again.

Not every operator is following the same playbook. Rush Street Interactive, which operates BetRivers, has taken a more cautious “flexible approach” while executives evaluate how the prediction market boom affects its existing sportsbook business. Prediction markets operate under federal commodities regulation rather than state-by-state gaming law, giving operators a path to customers in large, population-heavy states like California and Texas where traditional sports betting remains illegal. Legal challenges over prediction markets’ status are playing out in more than a dozen states, but the largest operators appear more worried about missing the moment than about losing those fights.

DraftKings CEO Jason Robins framed the opportunity in stark terms on his company’s second-quarter earnings call. “As we continue to improve our platform and monetization over the next several years, we believe that we can generate lifetime values on predictions customers similar to those on our sportsbook customers,” Robins said. With NFL kickoff just weeks away, that bet is about to be tested at scale.