This Week in Prediction Markets: FanDuel Expands, Courts Push Back, and Washington Gets Involved

Prediction markets had another huge week, though this time the biggest stories were not just about platform growth. The conversation shifted heavily toward regulation, Wall Street expansion, and how major companies plan to turn these products into long-term businesses. From where we sit, the industry feels like it is entering a completely different phase compared to even six months ago.

You can see it happening from every direction. FanDuel is investing aggressively despite minimal early revenue, courts are forcing states and federal regulators into direct conflict, and lawmakers in Washington are now openly trying to build national frameworks around event contracts. Prediction markets are no longer sitting on the edge of finance. They are moving directly into the middle of it.

FanDuel Predicts Shows Flutter is Thinking Bigger

One of the clearest signals this week came from Flutter Entertainment’s earnings call. FanDuel Predicts barely generated meaningful revenue during the first quarter, though Flutter still made it clear the company plans to spend aggressively throughout 2026. Executives openly discussed customer acquisition, market-making, and future expansion tied to sports event contracts.

That matters because companies do not usually commit hundreds of millions toward products they view as experiments. Flutter confirmed it expects roughly $300 million in investment-related losses connected to prediction markets this year. That says the company sees a much larger opportunity down the road, especially around football season and the World Cup.

The market-making angle was probably the most interesting piece. Flutter revealed it has already tested market-making services on other prediction market platforms while preparing its own internal system. That shifts FanDuel from simply offering contracts toward potentially shaping pricing and liquidity across these markets.

Courts Continue Defining the Industry

Kalshi spent another week in courtrooms, though the outcomes were mixed by state. Arizona handed Kalshi a major win after a federal judge blocked the state from pursuing enforcement actions against the company. The court sided with the argument that federally regulated derivatives markets fall under CFTC oversight rather than state gaming laws.

That ruling becomes more important because it follows similar federal momentum seen in New Jersey. Several courts are increasingly treating Kalshi as a financial exchange rather than a traditional sports platform. States obviously disagree with that framing, which is why these cases keep escalating.

Massachusetts told a very different story. Judges there appeared far more skeptical of Kalshi’s argument during oral hearings this week. Several justices repeatedly questioned how sports event contracts differ from products that states have historically regulated themselves. That split between courts is creating one of the biggest uncertainties hanging over the industry right now.

Washington Starts Building a Framework

Lawmakers are no longer treating prediction markets like a niche internet product. Senator Dave McCormick introduced a new federal proposal, the Prediction Market Act, this week alongside Senator Kirsten Gillibrand. The legislation would create clearer federal rules around event contracts while expanding consumer protections and ethics restrictions.

The proposal also includes limitations that prevent public officials from participating in contracts tied directly to outcomes they could influence. That conversation gained momentum quickly after recent concerns about insider trading linked to military intelligence and political activity.

States are moving in the same direction. Maryland and New York both tightened restrictions on how government employees interact with prediction markets. The overall tone has clearly shifted from “should these exist?” toward “how should these operate safely?”

Wall Street and Mainstream Finance Keep Moving Closer

Prediction markets also continued pushing deeper into traditional finance this week. Robinhood CEO Vlad Tenev publicly discussed the possibility that prediction markets could eventually become a trillion-dollar annual business. That is a massive statement considering how recently these platforms still felt niche.

At the same time, the SEC delayed several ETF proposals for prediction markets tied to firms such as Bitwise, Roundhill Investments, and GraniteShares. Regulators want more clarity around how event-contract ETFs would function before approving products tied to binary outcomes and derivatives exposure.

What This Week Says About Prediction Markets

This week showed how quickly prediction markets are evolving from startup-style products into something much larger. FanDuel, Robinhood, Wall Street firms, lawmakers, and federal courts are all now heavily involved in shaping what comes next. That is not something you see with temporary trends.

The biggest takeaway is simple. Growth is no longer the only story. The industry is now entering the stage where regulation, market structure, and long-term sustainability matter just as much as hype and user numbers. The next few months could define how prediction markets operate in the United States for years to come.