Betting Markets Rattle Sportsbook Stocks During NFL Playoffs

Stock prices of big US sports betting firms took a nosedive in mid-January. New data showed rising competition from prediction market platforms during the NFL season’s busiest weeks.

Traditional Sportsbooks Stumble as Kalshi, Polymarket Gain Ground

DraftKings and Flutter Entertainment, which owns FanDuel, saw their shares drop. Investors reacted to hints that old-school sportsbooks might be losing steam when betting usually peaks. DraftKings’ stock fell by over 8% for a short time, while Flutter’s dropped more than 5%, as reported by Fortune. This pulled down other gambling-related stocks, too.

What pushed the market to react was a combination of how companies did and how people’s buying habits changed. In New York, the biggest legal sports betting market in the nation, weekly numbers revealed a big drop in online sportsbook earnings during the NFL Wild Card weekend compared to last year. Money made from gambling in the week ending January 11 was about 40% less than the same time last year, even though the playoffs bring in a lot of bets.

At the same time, Kalshi and Polymarket saw record interest tied to big NFL games. These platforms offer financial contracts based on sports results and operate under federal commodities rules instead of state gambling laws. NFL-related contracts on Kalshi hit a new high in trading volume during the early playoff rounds, with some games showing unprecedented activity, according to analyst estimates.

Download Data Signals Shift From Sportsbooks to Prediction Markets

The difference in results has sparked more debate on Wall Street about whether prediction markets are changing from a small product to a real option to sportsbook betting for big sporting events. Analysts point out that these platforms have gained wide access through brokerage apps and from a product setup that looks like betting while avoiding many state-level limits.

Data downloads in the playoff period paint a clearer picture. While most top sportsbook apps saw fewer new user installs year-over-year during the Divisional Round, Kalshi had its best run of user sign-ups yet, hitting about one million downloads over the playoffs. Experts who watch this field think prediction markets might now pull in around 5% of all sports betting activity.

Sportsbook companies say tougher comparisons and a more careful approach to promotions played a part. Some firms have cut back on marketing to focus on making money, offering fewer big deals that used to bring in new users during the NFL season. DraftKings was the only big player to see a small uptick in downloads during this time.

Legal questions still loom large. State gaming boards have questioned whether sports prediction contracts break the law, while platforms argue their products follow the rules. This unresolved issue makes investors wary.