Ahead of the 2025 NFL season, analysts estimated that bettors would wager more than $30 billion on the league. That figure put sports betting stocks in the spotlight, but now they're in the spotlight for a negative reason. Prediction markets have increased their sports options and are hitting record volume thanks to the NFL.
DraftKings stock is showing weakness. Why is DKNG stock trading lower?
Prediction Markets Hit Records
The first six games of the NFL Playoffs took place on Saturday, Sunday and Monday. Prediction markets could emerge as the big winners.
According to data from prediction markets and sports betting reporter Dustin Gouker, Kalshi set records for volume on both Saturday and Sunday.
Betting volume on Saturday hit $455 million; Sunday surpassed with $466 million. The totals include volume from partners like Robinhood Markets (NASDAQ:HOOD), which use Kalshi.
Sports made up 94% of betting volume on Sunday and over 90% on Saturday.
The top markets on Sunday and their percentage of volume were:
- NFL Games: 28.2%
- NBA Games: 11.8%
- Multi-Sport Parlays: 10.8%
- NFL Same Game Parlays: 6.7%
- NFL Spreads: 6.0%
There were two NFL Playoff games on Saturday and three on Sunday. Other sports saw much lower betting volume on the platform, with NCAA Men's Basketball at 5.5% and NHL at 1.2% on Sunday.
The strong momentum for Kalshi to start the NFL Playoffs stems from prediction markets ending 2025 with high volume.
A report from DeFi Rate showed Kalshi hitting $2 billion in weekly volume and Polymarket hitting $1.5 billion in weekly volume.
Kalshi could have a greater impact on sports betting markets, with sports accounting for approximately 90% of weekly volume. On Polymarket, sports accounted for approximately 40% of volume during the week of Jan. 5 through Jan. 11, with crypto and politics also ranking high.
Sports Betting Stocks In Trouble?
Kalshi’s and Polymarket’s growth could hurt sports betting companies like DraftKings Inc (NASDAQ:DKNG) and Flutter Entertainment (NYSE:FLUT).
Both companies are also developing their own prediction markets to support future growth.
Prediction markets operate under different sets of rules. As a result, residents in certain states that prohibit online sports betting can access Kalshi. While lawsuits have popped up and the rules for prediction markets could be different in coming years, right now they pose a major risk.
Markets offered on non-sports items like politics, cryptocurrency and entertainment are also more prevalent on Polymarket and Kalshi, giving users more reasons to use the prediction markets.
DraftKings and Flutter may have waited too long to launch prediction markets, and their future earnings reports will show what kind of room they are making in the sector.
The key question remains whether prediction markets are diverting customers from sports betting operators or increasing overall betting volume and attracting new consumers, including crypto-native consumers, to the betting market.
DraftKings and Flutter are expected to report quarterly results in late February or early March, reports that will be closely watched by investors and analysts.
DraftKings has beaten earnings per share estimates from analysts in two straight quarters and in four of the last five quarters overall. The company has missed revenue estimates in four of the last five quarters overall.
For Flutter, it's much of the same, with earnings per share beating analyst estimates in three of the last four quarters, while revenue has missed estimates in three of the last four quarters.
DraftKings stock is down 14.5% over the last 52 weeks, while Flutter shares have fallen 21% over the same time period. The companies could remain a major storyline to watch with the Super Bowl on Feb. 8 and March Madness later in mid-March.
Those events are key for sports betting companies, and increased competition from prediction markets could weigh on results and/or lead to greater marketing efforts that could harm profitability.
Image: Shutterstock
