The 10 Second Takeaway: DraftKings and other online sports betting platforms are losing market share to predictive markets.

DraftKings (Nasdaq: DKNG) and FanDuel (owned by Flutter Entertainment (NYSE: FLUT)) have enjoyed more than 80% share for years in America's online sports betting market duopoly.
But now they're adjusting to a new player who's recently joined their table.
Privately-held Kalshi has a reserved seat to allow gamblers to bet on sporting events. Yet this isn't the same as its larger peers, and its new approach is taking the industry by storm.
Kalshi isn't just another online sports book. It is technically an exchange who sells financial products that are tied to the outcomes of sporting events.
That legal distinction is important, because Kalshi and other predictive market platforms are regulated by the Commodity Futures Trading Commission at the federal level. That's quite different from online sports betting platforms, who are regulated by each individual state.
DraftKings and FanDuel have been lobbying endlessly on a state-by-state basis, trying not only to get their apps legalized but also for them to have consistent tax rates. Even after decades of operations, online sports betting is still only legal in 38 states + the District of Columbia.
Yet Kalshi's financial products are available in all 50 states and have quickly sidestepped the traditional book of rules.
As expected, the money is flowing to what's more universally available. The NY Times reported that Kalshi facilitated more than $2.5 billion worth of sports contracts in September alone, with the majority being on NFL games.
That's a pretty formidable number, especially when considering the total cash handle for all sports betting last year was around $150 billion.
There are political ties here as well. Kalshi named Donald Trump Jr as a strategic advisor one week before the president's inauguration, and the Trump Administration further issued tax cuts that are financially advantageous for future contracts as compared to traditional gambling.
I don't personally see much of a difference between prediction market financial contracts and online sports bets. They're pretty much identical in function and are placed in exactly the same way within the apps by users.
Yet in this highly-regulated industry, Kalshi and its predictven market peers appear to have been given a Trump Card. And that's providing an important edge that is causing it to win big at the expense of others.
DraftKings will report its third quarter earnings in early November. I'll grab a front row seat and some popcorn, eager to see how this game will ultimately play out.

See all of our coverage on DraftKings at 7investing.com/DKNG

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