Can These 3 Companies Turn the Prediction Market Sector Into Serious Profit?

By Thomas Niel – Jan 11, 2026 at 10:15AM ESTKey PointsAfter parlaying success with daily fantasy contests into success as a sportsbook operator, DraftKings could pull off a similar gambit with its game plan for entering the prediction markets.Flutter Entertainment has a similar plan up its sleeve, with its ongoing launch of FanDuel Predicts.Prediction markets could prove to be the next great frontier for Robinhood Markets to conquer.CEO says this is worth 18 Nvidias. Will this make the world's first trillionaire? ›NASDAQ: DKNGDraftKingsMarket Cap$18BToday's Changeangle-down(-2.25%) $0.81Current Price$35.17Price as of January 9, 2026 at 4:00 PM ETCan market incumbents in sports betting and financial services take on first-movers like Kalshi and Polymarket?Over the past year, prediction markets like Kalshi and Polymarket have received regulatory approval to offer sports-based prediction contracts. Following this, they have fast become key competitors to traditional sportsbooks. Admittedly, concerns about prediction sites disrupting the likes of DraftKings (DKNG 2.25%) and Flutter Entertainment's (FLUT 0.95%) FanDuel have perhaps been overblown. According to sell-side analyst Citizens' Jordan Bender, the emergence of these platforms has so far resulted in a 5% decrease in overall betting handle for the legal, regulated U.S. sportsbooks. Then again, as these platforms offer numerous advantages, the industry isn't sitting on its laurels. DraftKings and Flutter, as well as financial services company Robinhood Markets (HOOD 0.10%), have made big moves into prediction markets. Let's take a closer look at each competitor and determine whether this pivot will prove profitable. Image source: Getty Images. DraftKings' prediction push could benefit the company in two ways On Dec. 19, DraftKings launched its DraftKings Predicts platform. This recent pivot stands to benefit the company in two separate ways. First, with DraftKings Predicts, the company can enter markets where sports betting is not yet legal, such as California and Texas. ExpandNASDAQ: DKNGDraftKingsToday's Change(-2.25%) $-0.81Current Price$35.17Key Data PointsMarket Cap$18BDay's Range$35.07 - $36.9552wk Range$26.23 - $53.61Volume9.6MAvg Vol15MGross Margin39.23% Second, by launching this platform in these states, the company can demonstrate to state lawmakers how much potential tax revenue they are forgoing. This could fast-track legalization in these states, as those who have previously signed up for DraftKings' predictions platform open accounts on its sports wagering platform.Advertisement DraftKings' strategy has already resulted in a partial rebound for shares. A further recovery may be in store in 2026. Flutter Entertainment has a similar plan up its sleeve U.K.-based online gambling giant Flutter Entertainment has also entered the U.S. prediction markets space. Through a partnership with CME Group, Flutter has launched FanDuel Predicts in five U.S. states, with plans to expand nationwide throughout the year. ExpandNYSE: FLUTFlutter Entertainment PlcToday's Change(-0.95%) $-2.06Current Price$215.30Key Data PointsMarket Cap$38BDay's Range$213.03 - $223.9552wk Range$189.33 - $313.69Volume1.3MAvg Vol2.4MGross Margin46.12% Flutter is likely taking the same approach with the prediction markets that DraftKings is taking. That is, using it as a platform to penetrate the market in states where traditional sports betting is not yet legal. That's not all. Flutter and DraftKings are likely launching prediction market platforms for another reason: to assuage concerns about declining market share. Assuaging concerns could lead to significant valuation expansion for sports betting stocks. A year ago, Flutter was trading at a forward price-to-earnings (P/E) ratio in the high-20s, whereas now, it's trading for less than 19 times forward earnings. Prediction markets could get Robinhood stock back on track After a strong performance throughout most of 2025, Robinhood Markets' stock has struggled in more recent months, largely due to increasing concerns about a growth slowdown. As I discussed recently, Robinhood reported a big drop in stock and crypto trading volumes in November. ExpandNASDAQ: HOODRobinhood MarketsToday's Change(-0.10%) $-0.12Current Price$115.27Key Data PointsMarket Cap$104BDay's Range$114.90 - $118.2352wk Range$29.66 - $153.86Volume681KAvg Vol26MGross Margin89.78% If this marks the start of a trend, it may have a further impact on Robinhood's valuation. That said, some growth catalysts may help to counter this potential risk. Robinhood's ongoing move into the prediction markets is a key example. Robinhood's prediction market platform debuted during Q1 2025, and by Q3 2025, prediction market trading was generating around $100 million in quarterly revenue for Robinhood. With the recent launch of contracts similar in nature to prop and parlay bets, this segment could become an even larger portion of the company's overall business.Read NextJul 5, 2023 •By Dave KovaleskiWhy DraftKings Stock Jumped 13.8% in JuneSep 25, 2021 •By Matt Frankel, CFPUp 30% in 2021, This Gaming Stock Could Be Just Getting StartedMar 8, 2021 •By Matt Frankel, CFPThe Benefits and Risks of SPAC IPOsNov 5, 2020 •By Joe TenebrusoWhy DraftKings Stock Jumped TodayAug 25, 2020 •By Howard SmithWhy DraftKings Jumped 10% TodayJul 9, 2020 •By Matt Frankel, CFPThis Online Gambling Stock Soared Today, and It Isn’t DraftKingsAbout the AuthorThomas Niel is a contributing Analyst at The Motley Fool, covering publicly traded companies in the consumer goods and technology sectors. Prior to the Motley Fool, Thomas was a contributing Analyst for several online investing publications, including InvestorPlace, Seeking Alpha, and TipRanks. He also has past career experience in the accounting and government contracting industries. He holds a B.B.A. in Accounting from Marymount University. Thomas won his school's geography bee in the fifth grade, but retired from the professional geography bee circuit shortly thereafter.TMFThomasNielStocks MentionedDraftKingsNASDAQ: DKNG$35.17 (0.02%) $0.81Flutter Entertainment PlcNYSE: FLUT$215.30 (0.01%) $2.06Robinhood MarketsNASDAQ: HOOD$115.27 (0.00%) $0.12*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.Advertisement