Analyst Downplays Prediction Markets’ Threat to Sports Betting Sector

The quick growth of prediction markets in the last year has worried investors, but new research suggests these markets do not shake up traditional sportsbook operators as much as headlines suggest. 

Analyst Says $8B Wallet Shift Doesn’t Threaten Major Sportsbook Operators

Fresh numbers from Citizens Equity Research show that about 5% of legal US sports betting volume has moved to event-trading platforms, which adds up to around $8 billion in yearly handle. While noticeable, this amount is not seen as big enough to change the outlook for the major operators.

The report indicates that the shift in betting activity is real but limited. Research drawing from over a million linked user transactions gathered by the Juice Reel aggregator reveals that while bettors move some of their money after trying event-trading platforms, their overall spending goes up. Users cut their regular gambling funds by about 11% after joining prediction markets, but their total combined activity across all betting types grew by around 9%. Experts see this as evidence that prediction markets are expanding total involvement rather than taking over existing markets.

Jordan Bender, a top analyst at Citizens, claimed that investors have been too gloomy. He pointed out that the drop in stock prices in 2025 was much bigger than the actual effect of market share loss. Bender said that for big companies like DraftKings, FanDuel, and Fanatics, this change has little financial impact because these firms now run their own prediction platforms and can win back users who leave. The fact that they control more than 75% of legal betting in the US gives them extra protection.

Analysts Say Prediction Market Boom Hurts Brick-and-Mortar Operators Most

Companies without similar products face a tougher situation. Businesses with many physical stores — like Caesars, MGM’s BetMGM, Penn Entertainment, and Rush Street — risk losing more customers to online markets. Experts think these companies have not started their own versions because they worry online event betting might cut into their real-world casino profits.

A lot of the recent increase comes from Kalshi. Its monthly event-contract volume went over $6 billion in November and December. This happened because of football demand and heavy marketing. Even with this jump, growth from month to month has started to level off. 

Another worry that is coming up is how users are doing financially. The study shows that new users lose money faster on prediction platforms than on regular sports betting apps. This is because the average trade is over $180, more than three times what people bet on sportsbooks.

At the same time, traders with more experience are doing better than casual users. This is making less successful users leave more often. On the whole, experts say that while the category is growing fast, it has a small impact on sportsbook finances right now — similar, Bender pointed out, to the industry’s drop in earnings from an unprofitable Monday night football game.