How FanDuel Is Approaching About Prediction Markets

Key Concepts

• Sports Betting Legalization: The repeal of PASPA in 2018 and subsequent state-by-state legalization of sports betting in the US.
• Customer Acquisition Cost (CAC): The expense of gaining a new customer, evolving with market saturation.
• Competitive Landscape: Domination by FanDuel and DraftKings, with emerging competitors like casinos, Fanatics, and prediction markets.
• Prediction Markets: Newer platforms allowing users to bet on the outcome of events, distinct from traditional sportsbooks.
• iGaming (Online Casino): Online casino games, offering different demographics and revenue potential compared to sports betting.
• Brand Authenticity: The importance of genuine representation through athlete endorsements and content creation.
• Regulatory Environment: The evolving state-level regulations and taxation impacting the sports betting industry.
• Integrity & Responsible Gaming: Safeguards needed for prediction markets to ensure fairness and prevent abuse.

Market Evolution and Growth (2018 – Present)

The US sports betting market has experienced rapid growth since the Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA) in 2018. Six years ago, FanDuel was live in only three states, coinciding with a temporary shutdown of sports. Currently, approximately 50% of the US population has access to online sports betting, with roughly half of the states having legalized it. This represents a significant expansion in a short timeframe. The market is no longer about simply introducing people to the category, but rather competing for customer “mind share” and engagement.

FanDuel’s Competitive Advantage

FanDuel attributes its sustained market leadership to several factors. Initially, their experience in Daily Fantasy Sports (DFS) allowed them to build a strong brand associated with sports and gaming. They developed a “business-to-consumer digital marketing first” approach and possessed significant marketing acumen. Crucially, FanDuel and DraftKings differentiate themselves from competitors (casinos, Fanatics) by focusing exclusively on online gaming. Christian Janetski emphasized, “This is all we do…that will to win and that singular focus has served both companies well.”

Competitive Dynamics & Emerging Threats

While FanDuel and DraftKings currently dominate market share, the competitive landscape is evolving. Janetski acknowledged the emergence of “prediction markets” as a new competitive set, particularly in states like California where traditional sportsbooks are unavailable. However, he stated the company’s primary focus remains on internal improvements and customer satisfaction, borrowing a sports analogy: “We worry about the people in our locker room…and our customers more than anybody.” FanDuel is willing to analyze innovations from competitors but prioritizes maintaining its own position.

Customer Acquisition & Evolving Costs

The cost of acquiring new customers has changed significantly. In 2019, launching in Pennsylvania involved introducing customers to the concept of FanDuel and sports betting. Now, with FanDuel operating in half the country and extensive national advertising (including Super Bowl ads), many potential customers already have accounts from neighboring states or previous travel. This has shifted the focus from initial acquisition to increasing customer engagement and wallet share. The launch in Missouri in December 2025 exemplifies this shift, with many residents already possessing FanDuel accounts from Kansas or Illinois.

Investment in Athlete Marketing & Content

FanDuel is heavily investing in athlete endorsements and content creation through the FanDuel Sports Network. Partnerships with figures like Rob Gronkowski, Kevin Durant, Jordan Speith, and the “Busting with the Boys” crew are seen as essential for brand positioning. Janetski stressed the importance of “authentic voices” and “meeting our fans where they live.” He believes that genuine representation is key, and that simply using a “pitch man” will not resonate with audiences. While the company is open to expanding these partnerships, it prioritizes finding the “right people” who authentically represent the brand.

Regulatory & Tax Landscape

The sports betting industry is still in its “early innings,” with states continuing to refine regulations and taxation. Janetski highlighted that FanDuel alone has paid over $6 billion in taxes to states, which funds essential services like teacher and first responder salaries, and responsible gaming resources. He believes that finding the “right size” of taxation is crucial for allowing the market to grow and flourish while still contributing significantly to state revenue.

Prediction Markets: Opportunities & Challenges

Prediction markets represent a new frontier in online gaming. The CFTC has created a regulatory pathway for these markets, but FanDuel is taking a cautious approach. While they have opted not to participate in prediction markets in states where they offer sports betting (to protect their existing state partnerships), they are offering “FanDuel Predicts” in states without regulated sportsbooks as a way to engage customers and potentially pave the way for future legalization.

Janetski identified two key concerns: the potential for “bad actors” and the ethical question of expanding gambling options. He emphasized the need for robust integrity controls and responsible gaming safeguards, mirroring those in place for sports betting. He also acknowledged the risk of insider trading and the need for clear rules to prevent it. He noted that the market is attracting a dedicated base of traders, analogous to Wall Street.

iGaming & Long-Term Strategy

While sports betting is a core business, FanDuel is also expanding into iGaming (online casino). Janetski noted that iGaming attracts a different demographic (more female, slightly older) and offers distinct marketing opportunities. However, he clarified that the goal isn’t necessarily to push sports betting customers towards iGaming, but rather to allow customers to engage with the games they enjoy most.

Future Outlook & Key Takeaways

FanDuel views the US sports betting market as still being in its early stages of development. They are actively working to build relationships with key stakeholders, particularly in states like California and Texas, to facilitate future legalization. The company is committed to maintaining a focus on integrity, responsible gaming, and customer satisfaction. Janetski concluded that for prediction markets to thrive, they must be fair, transparent, reliable, and trustworthy.

Notable Quote:

“This is all we do…that will to win and that singular focus has served both companies well.” – Christian Janetski, President of FanDuel.

Technical Terms:

• PASPA (Professional and Amateur Sports Protection Act): A US federal law, repealed in 2018, that effectively banned sports betting in most states.
• CAC (Customer Acquisition Cost): The cost associated with acquiring a new customer.
• CFTC (Commodity Futures Trading Commission): The US government agency regulating prediction markets.
• iGaming: Online casino games and gambling.
• Self-Exclusion: A voluntary process allowing individuals to ban themselves from gambling platforms.