U.S. sports betting giants are entering the prediction market.

US sports betting giant FanDuel has also begun entering the “prediction market.”

According to a joint press release issued on Wednesday, November 12, FanDuel announced it will launch an independent prediction market app, “FanDuel Predicts,” in December. This move is part of a collaboration between its parent company Flutter and the Chicago Mercantile Exchange Group (CME).

Just a few days earlier, its main competitor DraftKings also announced a similar plan to launch the “DraftKings Predictions” platform.

After the news was released, Flutter’s shares fell by 4% in after-hours trading. This series of moves highlights that betting companies are using a federally regulated financial product, parallel to traditional sports betting, to expand their business footprint.

The core of prediction markets is “event contracts,” a financial instrument that allows users to trade on the outcomes of future events (such as stock indices, economic data, and even sporting events).

Unlike sports betting, which is regulated at the state level, event contracts are regulated by the federal Commodity Futures Trading Commission (CFTC), making them legal nationwide and exempt from state betting taxes. This provides betting companies with a way to operate in states where sports betting has not yet been legalized.

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