Editorial staff
All over the news
Predictions markets are all over the news. You only have to open a social media app, tune in to a podcast, or go to the website or physical pages of any news outlet, and you will find news about Kalshi, Polymarket, and a whole host of other prediction market brands. While gambling is regulated at the state level in the US, prediction markets allow citizens to take a position on a future event with a binary outcome.
When looking at news about the mid-term elections, you will often see reporters talking about what the prediction markets say, as if they were quoting specialists. However, is that really the case? What exactly are prediction markets? How do they work, and how are they even legal in a country that does not allow federal regulators to have a say in betting markets? Well, it is all rather complicated so that we will take a deeper dive. To add to the confusion, betting and online casino sites like FanDuel have also thrown their hats into the ring, launching their own prediction market services.
When is gambling not gambling? When it's a trade!
Event-based trading is on the rise. While these sites initially appear to be gambling sites, they are in fact classified as financial derivatives. They allow consumers to trade contracts with each other, which are tied to the potential outcome of real-world events. These could be about politics, economic data, cultural events, and (more contentiously) sport. They function very differently from traditional betting or online casino sites. They use a different type of pricing mechanism to determine the probability. Essentially, rather than bet against the house, traders buy and sell YES and NO trades with each other.
Event-based trading sites and apps allow all US citizens (not just those residing in states where online sports betting for real money is legal) to 'bet ' on the outcome of a future event. However, the 'bets' are, in fact, event contracts, a type of financial instrument that is a futures contract for predictions. Therefore, rather than being regulated at a state level, they fall under the jurisdiction of the CFTC.
How does it work?
Event contracts start at around $1 and can be traded on a future event with a YES or NO outcome. When the result is known, the contract is paid out. The Commodity Exchange Act gives the US Commodity Futures Trading Commission (CFTC) the authority to determine whether contracts are contrary to the public interest. There has been a good deal of concern recently that people have been betting on the outcome of wars, and there have also been warnings about insider trading. It is a very dynamic market itself, and regulators at both the state and federal levels are engaged in a tug-of-war over what is and is not legal.
The situation with the state legislators is quite amusing. On the one hand, you have ultra-conservative states concerned that their residents will now be able to bet. On the other hand, you have progressive states with legalized online gambling concerned about losing lucrative revenue to the new-kids-on-the-block. The state-licensed established betting sites are also keenly aware that prediction markets could threaten their business, particularly those offering trades on sporting events.
Eyeing up the competition
The likes of FanDuel have spent millions (not billions) of dollars to establish themselves as the dominant betting platform in the country. It had relatively recently broadened its business base to enter the highly lucrative (and highly regulated) online casino business. Therefore, unsurprisingly, it had been developing its own strategy to tackle the upstart prediction-market apps head-on.
In December 2025, FanDuel announced it was launching FanDuel Predicts in partnership with the CME Group (the world's leading derivatives marketplace). Initially, it launched in Alabama, Alaska, South Carolina, North Dakota, and South Dakota, but it has now rolled out across all 50 states plus DC. However, it does not offer trading on sports events in states where online sports betting is legal. It said that, in addition to financial markets, contracts for baseball, basketball, football, and hockey were available in states where sports betting was not yet legal. However, it stated that it would cease offering sports event contracts as and when states legalize online sports betting.
FanDuel had already seen off several international commercial online betting companies, forcing them to withdraw from the US market. One can only assume they hope to use their marketing heft and budgets, together with industry knowledge, to take on the likes of Kalshi and Polymarket. Historically, they were particularly good at customer acquisition and brand awareness. They appear to be using similar tactics in the prediction markets.
Bonuses and promotions to attract attention
While FanDuel Predicts and the other prediction market sites and apps are not strictly gambling, they are closely enough related for expert gambling review sites to keep a close eye on them and make recommendations to their readers. SportBookReview rates the site as one of the best and was particularly impressed by the generous $25 sign-up bonus. Potential traders do not need a promo code or even to make a deposit to receive the sign-up bonus.
Traders need to download and install the app, open the registration form, and enter their personal details. To comply with the law, the name, address, and date of birth must match the information on a valid government-issued ID. Once the registration process is complete, the bonus funds will be added to the user's account.
The bonus is considerably more generous than those currently on offer from other sites, and the only restriction is that it must be used within 3 months. A deposit is not a requirement to receive the bonus funds, but users should be aware that the minimum deposit on the platform is $5 and the maximum is $2,500.
When the site was launched, James Cooper, Senior Vice President of New Ventures at FanDuel, told the press,
"This launch in five states will provide valuable insights into customer engagement with this new platform, enabling us to refine our approach as we expand to additional states in 2026."
They must have been pleased with what they experienced, because they are not leaning hard into this market. They regard it as a parallel and not an alternative. However, they do not want to miss out on potential trades in high-population states like California and Texas that do not allow online sports betting. In states where they operate sportsbooks, you can bet your bottom dollar that they will be offering generous bonuses to keep customers loyal and prevent them from trying out the competition.
Futureproof strategies
FanDuel's strategy is to leverage its mainstream position to bring in customers who might be nervous about new, crypto-based platforms. That way, it can expand into new trading markets without cannibalizing the existing sportsbook and online casino customers. One area where it will probably score more highly than others is with regard to customer service. It maintains that it will extend its commitment to consumer protection and allow customers to set deposit limits, receive deposit alerts, and self-exclude if required.
While prediction markets might be relatively new, FanDuel has been operating in the trading-adjacent gambling market very successfully for a number of years. It is bringing all its learning to prediction markets. How this will play out, who knows? Perhaps you might like to take a trading position on that!
Editorial staff
