Giants might team up
In a move likely to ring alarm bells across the sports betting and prediction market industries, the two respective market leaders FanDuel and Kalshi have reportedly held talks over a potential partnership.
According to Front Office Sports, Flutter-owned FanDuel and New York-based Kalshi are sounding out a potential partnership that would include “various betting efficiencies” between the two firms.
FanDuel has kept a close eye on prediction on the Contracts For Difference (CFDs) landscape. In March CEO Jason Robins said that while prediction market products lacked “the richness of a true sportsbook offering” CFDs “could be an interesting opportunity.”
The prediction market industry has exploded in popularity since, with Flutter CEO Peter Jackson stating recently his firm had seen an opportunity to access US states where sports betting remains illegal.
Multiple potential benefits
The potential coming together of two industry juggernauts presents many immediate benefits to FanDuel.
Kalshi can offer its markets across all 50 US states, whereas FanDuel can only operate in the 39 states where sports betting is legal. A tie-up with Kalshi would potentially see FanDuel legally enter these markets, should sports betting CFDs be allowed, while paying less for licenses, taxes, and being restricted by fewer regulations.
FanDuel customers could also get cross-marketed into non-sports betting, such as which songs will hit 100 Million Spotify streams in June?
states like Texas and California remain open frontiers
Given the potential low-hanging fruit, according to FOS, “big-population states like Texas and California remain open frontiers in the gold rush,” and FanDuel is seemingly sharpening its tools in readiness to claim a stake.
What Kalshi gains?
FanDuel’s courting of Kalshi comes after the event marketing brand won two key battles in Nevada and New Jersey. On both occasions, the federal judge tossed cease and desist orders from those state regulators, ruling instead Kalshi could continue to offer its CFDs.
While the legal wins make FanDuel’s rising interest apparent, aligning with the US market leader would, in turn, allow Kalshi to dominate the CFDs market even more.
give FanDuel leverage to take an equity stake in Kalshi”
With over 12 million registered users, the influx of FanDuel’s database would be a major boost to the liquidity of Kalshi markets. Reports cited industry insiders as suggesting “this user base could give FanDuel leverage to take an equity stake in Kalshi or other market-makers.”
