DraftKings, FanDuel, and MGM shareholders got an unexpected gift on Monday — courtesy of two U.S. senators who want to shut down their newest competitors.
A bipartisan bill introduced Monday would ban prediction markets like Kalshi and Polymarket from offering event contracts on sporting events. The reaction in traditional betting stocks was immediate: Penn Entertainment jumped 5.6%, Flutter Entertainment (FanDuel’s parent) gained 4.4%, MGM Resorts rose 4.4%, and DraftKings ticked up 1.2%.
The math behind the move is straightforward. Kalshi has been quietly eating the traditional sportsbooks’ lunch. An estimated 90% of Kalshi’s prediction-market fee revenue in recent months has come from sports contracts. That’s not a side hustle — that’s a direct assault on DraftKings’ and FanDuel’s core business.
Prediction markets operate in a regulatory gray zone. They’re technically not sportsbooks — they’re derivatives exchanges regulated by the CFTC, not state gaming commissions. That distinction has let them sidestep the state-by-state licensing gauntlet that traditional operators spent billions navigating. If you’re DraftKings and you paid the toll, watching Kalshi waltz through the side door isn’t exactly fun.
The proposed ban would level the playing field by forcing prediction markets back to their original lane: political events, economic data, weather — anything but sports. For incumbents like Flutter and Penn, that removes a fast-growing competitive threat overnight.
But there’s a catch. Bills like this die in Congress all the time. The prediction market lobby has powerful friends in Washington, and the crypto-adjacent crowd sees these platforms as financial innovation, not gambling. Polymarket in particular has become a cultural phenomenon, with millions watching its political prediction markets during election season.
For traders, the setup is interesting either way. If the bill passes, traditional sportsbook stocks get a meaningful tailwind. If it stalls, Kalshi and Polymarket keep expanding into sports, and the incumbents face a structural threat they can’t regulate away. Either way, this is a space worth watching closely — the regulatory battle is just getting started.
