Gambling stocks sag as prediction markets steal Super Bowl bets

The Super Bowl is supposed to be the highlight of the calendar for gambling companies. This year, though, a cloud has descended over the industry as the big game approached.  

The stock of Flutter Entertainment Plc, which runs one of the most popular US gambling apps, FanDuel, is on an eight week skid, the longest in 23 years. It’s main competitor, DraftKings, is trading around the lowest levels since 2023, and is down more than 60% from its all-time high five years ago.

The matchup between Seattle-New England — with less celebrity appeal than last year’s Taylor Swift-soaked event — is partly to blame. But the bigger concern hanging over the industry is the rise of prediction markets like Kalshi, which have come out of nowhere over the last year to offer a new way to bet on sports, bypassing the state-level gambling regulations that have restricted the spread of older gambling apps. 

Jordan Bender, senior equity analyst at Citizens, is expecting record breaking trading volumes on prediction markets this weekend at the same time that legal wagering on traditional sportsbooks — or handle as it is known — falls 2% from last year.

“A big piece of why we think Super Bowl handle will be down is that prediction markets are taking a bite out of that,” Bender said. 

It is quite the re...