FanDuel weighs prediction-market spending, profitability

Flutter Entertainment is assessing how much it can profitably invest in FanDuel Predicts as it separates the economics of acquiring retail customers from its market-making business. During its November 4 earnings call, management said customer behavior and returns over the coming months would help determine sustainable spending levels.

CEO Dan Taylor said prediction-market customers were being acquired at materially lower costs than sportsbook customers. However, the company was still assessing their long-term value. He identified potentially stronger returns in states that might eventually legalize online sports betting, where an established prediction-market customer base could support future sportsbook operations.

Management also described improvements to FanDuel Predicts following the nationwide launch of the FanDuel One App and the transition of sports-event contracts to Crypto.com. Taylor said the company had approximately 140,000 active prediction-market customers in October, while acknowledging that the revised offering had only recently begun operating at scale.

Flutter’s regulatory filing reported $119 million in prediction-market volume during the third quarter, up 102% sequentially. FanDuel Predicts averaged 66,000 monthly players, a 39% quarter-on-quarter increase. The company separately reported October volume growth of 271% compared with July; these figures describe trading activity rather than revenue.

Market-making forecast remains separate

Flutter reiterated expectations that its market-making operation would generate $50 million in revenue and approximately $40 million in adjusted EBITDA during 2026. CFO Robert Coldrake said the business was expanding its exchange relationships, but management did not increase that forecast or provide a numerical target for next year.

The company sees its experience pricing correlated outcomes and complex parlays as relevant to supplying liquidity across exchanges. Coldrake also cautioned that market-making involves fees and associated costs of sales. Its expected earnings should therefore be distinguished from the profitability of FanDuel’s consumer-facing prediction-market product.

Competition is also affecting the wider customer-acquisition environment. “We are, however, beginning to see an impact on our media costs, as prediction market operators increase their spend,” Taylor said during the call. Flutter expects prediction-market investment to continue at similar or higher levels in 2027.

The third-quarter filing stated that FanDuel Predicts revenue was not material during the reporting period, despite increased activity and product improvements. The assessment comes as competitors also commit resources to prediction markets, including DraftKings’ spending on its developing business.