According to a sell-side analyst, Flutter Entertainment's (NYSE: FLUT) FanDuel and DraftKings (NASDAQ: DKNG) could see a $5 billion total addressable market in US prediction markets.

in a fresh client report. That estimate was based on $600 million in non-sports yes/no derivatives and $4.4 billion in contracts for sports-only events, according to Macquarie analyst Chad Beynon. In the upcoming months, DraftKings and FanDuel are anticipated to introduce their own prediction markets. Beynon notes that due to less extensive wagering menus and lower advertising intensity, the sports-only total addressable market (TAM) for US prediction markets will be 25% lower than online sports betting handle.

"Another way to think about potential sports Prediction volumes over the next few years is to take the current weekly volume estimate of $1.3 billion (mostly from non-legal OSB states), multiply it by 1.38x, and then annualize this figure, keeping in mind that weekly volumes are now occurring during a seasonally high NFL period, thus capturing more growth when annualized,” notes the analyst.

He adds that DraftKings and FanDuel's non-sports prediction markets are expected to produce volumes that are 70% lower than the operators' sports-only offerings, suggesting a better balance than Kalshi (estimated 90% sports) and less diversification than Polymarket (33% sports).

FanDuel and DraftKings Will Join the "Big Five"

Despite being the two biggest US sportsbook operators, FanDuel and DraftKings entered the sports event contract market later than Kalshi and Polymarket, suggesting that it could be challenging for them to quickly steal market share. Nevertheless, the two are probably going to rise to the top of the sports prediction market hierarchy.

“For US sports-only Prediction markets, we conservatively assume slightly higher market shares for Kalshi/Robinhood/Polymarket given first mover advantage,” adds Beynon. “We believe the ‘big Five’ Prediction platforms will be: DraftKings, FanDuel, Kalshi, Polymarket, and Robinhood. Assuming a 4.7% take rate on volumes, we arrive at a near-term TAM of nearly $4.4 billion (only non-legal OSB states).

There is more to the event contracts industry, but sports, particularly the NFL, have fueled increasing volumes on Kalshi and other prediction markets. After all, electoral politics brought yes/no exchanges into the mainstream. Participants have demonstrated a willingness to embrace everything from cryptocurrency contracts to mention markets, and DraftKings and FanDuel have the potential to make money there, albeit far less than the $700 million Beynon estimate for sports-only derivatives.

“For the US non-sports Prediction market, we assume volumes will be ~30% of sports betting contracts,” according to the analyst. “We think this is appropriate given that this TAM only includes non-legal OSB states, resulting in a much higher percentage of sports volumes as the “go to” sports betting product in the state. Assuming a 2% take rate on volumes, we arrive at a near-term total addressable market of nearly $600 million (only non-legal OSB states). At 8/%12% respective market shares for DKNG/ FLUT, we arrive at roughly $45 million/67 million of revenue.”

"Multiform" Response Highlights DraftKings and FanDuel PM Advantages

Beynon observes that there are other reasons why the stocks have struggled, including as the well-documented low hold on NFL games, echoing the notion that the prediction market declines seen by shares of DraftKings and Flutter were too severe. Additionally, he notes that some market players are pricing in the most pessimistic of prediction market scenarios for the two major sportsbook companies, and that some investors have just become irritated with the stocks' poor 2025 performances.

“Under this scenario, one would have to assume that 100% of US states legalize OSB and DKNG/FLUT are not permitted to offer Prediction markets in any US state given state regulators,” concludes the analyst. “Further, one would have to assume a cannibalization rate of ~40% to justify the ~$10bn of market value destruction for DKNG and a much higher rate for FLUT in order to warrant the $20bn loss of market cap.”