The battle between prediction markets and sports betting companies could see changing of market share positions and/or could bring new users to the space.
A sports betting expert tells Benzinga there are plenty of ways that sportsbooks can still win in the market.
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Sportsbooks Still Win Vs. Prediction Markets
Dave Mazza is the CEO of Roundhill Investments, the company behind the Roundhill Sports Betting & iGaming ETF (NYSE:BETZ).
As someone who is following sports betting companies daily, Mazza has a good pulse on the growing competition of prediction markets and what it could mean for sportsbooks.
Mazza told Benzinga that both DraftKings Inc (NASDAQ:DKNG) and Flutter Entertainment (NYSE:FLUT)-owned FanDuel are working on launching prediction-style products to tap the growing market.
"That tells you the industry is evolving, not being displaced," Mazza told Benzinga. "Sportsbooks still win on product depth, user experience, media reach and regulatory positioning."
Regulation of prediction markets has been a key battle, with some states trying to keep the likes of Kalshi and Polymarket from operating there, as legal online sportsbooks are allowed to keep operating.
Mazza said that prediction markets offer simplicity for users and can provide different pricing mechanics.
"Regulation will determine how fast this converges, but it's not a zero-sum game. Ultimately, we see innovative disruption as an indication that the sports betting and gambling markets have longevity."
What's Next for Sports Betting?
Major sports betting stocks DraftKings and Flutter are down 26% and 34%, respectively, over the past 52 weeks. The two stocks are the second and fourth largest holdings in the BETZ ETF at 8.7% and 6.4% of assets, respectively.
"2026 looks like a consolidation year," Mazza told Benzinga. "Operators are focused on profitability, states are still interested in tax revenue and we'll likely see more partnership reshuffling and selective M&A."
Mazza said legalization of new states continues, but is at "a measured pace."
"How prediction markets are treated relative to traditional sportsbooks will be an important swing factor."
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