Forecasts leading into the 2025 NFL season anticipated wagers exceeding $30 billion on league games, positioning sports betting stocks prominently in financial discussions. However, this sector now faces challenges due to the rise of prediction markets expanding their sports-related offerings, registering unprecedented activity levels tied to the NFL playoffs.
DraftKings Inc., a notable player in the space, has experienced downward trading pressure on its shares, reflecting these market shifts.
Across three consecutive days encompassing Saturday, Sunday, and Monday, the opening six games of the NFL Playoffs took center stage. Amidst this backdrop, prediction market platforms are emerging as significant beneficiaries.
Insights from sports betting and prediction market analyst Dustin Gouker reveal that Kalshi witnessed record-setting betting volume figures on both Saturday and Sunday. The betting volume reached approximately $455 million on Saturday and marginally increased to $466 million on Sunday. These totals incorporate wagers processed via Kalshi's collaborators, notably including Robinhood Markets.
Sports wagering constituted a substantial majority of the volume, comprising 94% on Sunday and over 90% on Saturday, underlining the dominance of athletic events in these markets.
Examining specific segments of Sunday’s betting breakdown reveals that NFL games accounted for the largest share at 28.2%, followed by NBA games at 11.8%. Multi-sport parlays comprised 10.8%, while single NFL game parlays and NFL point spreads accounted for 6.7% and 6.0%, respectively.
This period featured two NFL playoff contests on Saturday and three on Sunday. Other sports attracted comparatively smaller segments, with NCAA Men's Basketball representing 5.5% of bets and the NHL at 1.2% on Sunday.
The surge in Kalshi’s betting activity at the start of the playoffs builds on a year-end momentum observed in 2025, as demonstrated by weekly volumes hitting $2 billion on Kalshi and $1.5 billion on Polymarket, a competing platform.
Within these weekly figures, sports wagering dominates Kalshi's volumes, accounting for roughly 90%. In contrast, Polymarket’s volume during the January 5 to January 11 week reflected a more diversified interest with sports at 40%, accompanied by substantial activity in cryptocurrency and political markets.
The growth trajectory of Kalshi and Polymarket raises noteworthy concerns regarding the potential pressure on established sports betting operators, specifically DraftKings Inc. and Flutter Entertainment PLC. Both companies are proactively developing their own prediction market capabilities to bolster future growth.
Prediction markets operate under distinct regulatory structures, enabling access by users from states prohibiting online sports betting, thus widening their audience. While existing litigation and anticipated regulatory evolutions suggest ongoing uncertainty, current conditions allow these platforms to present considerable competitive risks.
Beyond sporting events, Kalshi and Polymarket emphasize a diverse array of markets including politics, cryptocurrency, and entertainment, which may enhance consumer engagement and loyalty within these prediction ecosystems.
DraftKings and Flutter’s relatively delayed entry into the prediction market domain leaves open questions regarding their capacity to regain or preserve market share, with forthcoming financial reports expected to provide clarity on strategic positioning.
Fundamental to this sector analysis is the unresolved question of whether prediction markets cannibalize existing sports betting clientele or instead expand overall market participation by attracting new user demographics, including crypto-engaged bettors.
Investor focus will intensify around quarterly earnings disclosures from both companies, anticipated in late February and early March, to assess financial health and strategic responsiveness.
Historically, DraftKings has surpassed analyst earnings per share projections in four of the last five quarters, despite missing revenue estimates in most. Flutter Entertainment mirrors this pattern by exceeding earnings expectations thrice in the last four quarters but similarly falling short on revenue.
Stock performance over the past year reflects these operational challenges, with DraftKings down approximately 14.5% and Flutter shares declining about 21%. These fluctuations occur as significant sports events such as the Super Bowl on February 8 and March Madness in mid-March approach, critical periods for revenue generation among sports betting firms.
Heightened competition from prediction markets during these peak seasons could adversely influence financial outcomes for established operators or compel increased marketing expenditures, potentially reducing profit margins.
In summary, the burgeoning success and expanded reach of prediction markets like Kalshi signal an evolving competitive environment that traditional sports betting companies must navigate carefully to sustain growth and market relevance.