Prediction Markets Pilfering Just 5% of Legal Sportsbook Handle, Says Analyst

• Gambling News
• 07 January 2026

Despite all the hype and 2025 decline in the stock of major sportsbook operators, the truth is that gambling companies aren't losing a lot of revenue to prediction markets.

Citing Juice Reel data, Citizens Equity Research analyst Jordan Bender estimates that prediction markets are stealing around 5% of the handle of regulated sportsbooks, or about $8 billion, in a recent report to clients. However, handle isn't money. Instead, handle represents the entire amount of bets made.

Bender points out that although 5% is marginally more than previously thought, equities like DraftKings (NASDAQ: DKNG) and FanDuel parent company Flutter Entertainment (NYSE: FLUT) won't be negatively impacted.

"From a company perspective, we believe this is a wash for DraftKings, FanDuel (Flutter), and Fanatics, which are live with prediction market offerings,” observes Bender.

According to the analyst, sportsbook providers including Bet365, BetMGM, Caesars, Penn Entertainment, and Rush Street Interactive that are not exposed to prediction markets may face "slightly negative" situations. Rush Street Interactive (NYSE: RSI), on the other hand, has some protection against prediction markets because it was one of the top-performing gaming stocks of the previous year. In the past, the company claimed that it might profit from yes/no exchanges eroding sports betting taxes in different jurisdictions, which might encourage more states to authorize iGaming.

Users of Prediction Markets Spending Their Money

The start of football season undoubtedly increased the volume of prediction markets to all-time highs, but this hasn't helped retail customers, who are losing money on those platforms faster than they do on other types of betting.

Bender notes that within the 90 days after their initial visit to those exchanges, bettors who used prediction markets lost 7% of their wagers, while those who used other gaming venues lost 1%. Sharp bettors are more likely to take advantage of retail competition for single-game outcomes on prediction markets than on traditional sportsbooks, according to the researcher. This situation is unlikely to change anytime soon because exchanges like Kalshi encourage shrewd bettors to place bets there. Because the average prediction market wager is $185, or more than three times the $55 average at licensed online sportsbooks, those losses are substantially magnified.

“Said another way, prediction markets are creating worse losses for the worst users, while more educated bettors are winning more,” notes Bender. “We also believe retail is losing at a higher rate with prediction markets offering worse pricing for the average user while also competing against market makers and educated bettors with pricing models and official sports data.”

According to Bender's analysis, Kalshi's price was consistently worse than what was shown on DraftKings and FanDuel during the 2025 NFL season.

Additional Fascinating Market Prediction Nuggets

Although shares of DraftKings and Flutter are down 33% and 30%, respectively, from their 52-week highs, Bender reiterates the opinion that the decline in gaming stocks at the hands of prediction markets is excessive, pointing out that the impact of business lost to yes/no exchanges doesn't represent anything close to that level of cannibalization.

"To put the impact into a more digestible format, one bad “Monday Night Football” game could have the same negative result on EBITDA as the total impact the prediction market space is currently having on the sector,” says the analyst. “Additionally, incremental legalization over time will shrink the prediction market total addressable market through a superior product offering (online sports betting), in our view.”

Regarding regional ramifications, the Juice Reel data shows that places like Florida, Georgia, and Texas are not yet included in the pantheon of prediction markets. New York, New Jersey, California, Washington, and Ohio are at the forefront.