DraftKings scores, for now

DraftKings and Fanduel-owned Flutter Entertainment have long dominated sports betting, but prediction markets Kalshi and Polymarket are quickly stealing their spotlight. These platforms let users bet on everything from elections to NFL games, and they’re gaining momentum thanks to a lighter regulatory stance from the Trump administration.

Flutter and DraftKings haven’t been having a great season. Their stocks both dropped more than 10% last month after Kalshi introduced parlay bets on NFL games, a move that drew record activity and signaled just how quickly the new platforms are eating into traditional sportsbooks’ turf. Bank of America piled on earlier this week, downgrading both companies and warning that rising competition, tax risks, and football-season volatility could cut each company’s EBITDA by upward of $100 million per quarter.

Don’t call it a comeback

But just as the outlook was starting to look bleak, DraftKings caught a break. ESPN ended its 10-year partnership with Penn Entertainment only two years into the deal after it failed to live up to early expectations. The Disney-owned company announced a new exclusive deal with DraftKings, giving the betting giant access to the biggest brand in sports. Starting Dec. 1, DraftKings will operate the betting tab in ESPN’s app, integrating its sportsbook and fantasy offerings directly into the platform—an advantage that could help it win back some of the ground it’s lost to prediction markets.

Penn Entertainment sank 10.4%, while DraftKings rose 0.21% after the announcement. Jefferies analyst David Katz said the partnership could drive incremental volume, leveraging ESPN’s massive user funnel and DraftKings’ back-end product capabilities. Katz has a Buy rating and $51 price target on the stock (82.3% higher than where shares trade today), reflecting his confidence in the company’s long-term outlook.

But can it hold the lead?

Still, the wide world of sports betting is getting smaller as prediction markets offer a new way to gamble—and they're not going away anytime soon.

Robinhood, for one, has leaned in hard: The company doubled its revenue last quarter, with EPS up 259%, driven in part by its fast-growing prediction markets business. The product became Robinhood’s quickest ever to reach $100 million in annualized revenue, as users flocked to wager on roughly 1,100 listed events.

After years abroad due to regulatory hurdles, prediction market platform Polymarket is also preparing its US comeback later this month. The platform has already seen record momentum, with monthly active traders hitting an all-time high of 477,850 in October.

The ESPN deal is a much-needed win for DraftKings, but with prediction markets gaining ground, it might just be a short breather before the next big fight.—SY