Gambling stocks experienced a significant decline ahead of the weekend, impacting even leading platform DraftKings. New data suggests that traditional betting platforms may be losing market share to emerging prediction market platforms such as Polymarket and Kalshi.
The broader gambling stock market saw a sharp downturn on Friday, attributed to increased competition from prediction market platforms like Polymarket and Kalshi.
DraftKings (DKNG) shares fell by 7.6%, reaching a one-month low of $32.83. Flutter Entertainment (FLUT) also experienced a decline, hitting a six-month low of $190.17 after dropping 5.6% in the past day. The industry's S&P index, on average, shed 2.5%.
Traditional betting platforms did not benefit from a surge in interest towards predictions. Instead, they faced challenges as users explored opportunities on newly launched prediction apps, particularly with the NFL playoff season approaching.
Kalshi and Polymarket were already experiencing peak daily activity and trading volumes, driven by interest in financial predictions. The ongoing sports season is expected to further boost user engagement on these platforms. Concurrently, traditional sportsbook platforms are reporting slower revenue growth compared to the same period in 2025.
The shares of DraftKings saw a notable drop despite the company's recent announcement about launching its own native prediction markets. Both DraftKings and Flutter have introduced new prediction platforms in states where sports gambling is currently illegal. However, these platforms have yet to gain significant traction and have not matched the recent growth observed in crypto-native prediction markets.
Gambling Stocks Erase Their Advantage
Platforms like Polymarket, Kalshi, and Opinion are perceived by users as more accessible and fairer markets. The recent stock market crash followed Polymarket's assertion that its predictions do not intentionally restrict winning players.
Sharps are welcome on Polymarket.
No limit. No bans.
Unlike sportsbooks, we want you to win. https://t.co/8KbjJDzJvs
— Polymarket (@Polymarket) January 16, 2026
Polymarket has actively encouraged participation from high-profile traders, often referred to as "whales," whose strategies tend to attract more traders through social proof and copying mechanisms.
Polymarket issued a response to recent reports suggesting that sportsbooks calculate player odds and actively work to prevent "sharps" – players with a demonstrable competitive advantage – from making winning bets. Consequently, sports predictions now constitute up to 90% of trading volumes on Kalshi.
‘We do believe prediction markets are having an impact on the sports betting companies,’ said Jordan Bender, equity research analyst at Citizens, cited by Bloomberg.
‘The PMs are built around large tentpole events like the NFL playoffs,’ he said.
Prediction platforms are leveraging their recently established regulated status to offer more competitive odds and a fairer market for sports wagers. These emerging companies are also providing prediction services while navigating existing gambling laws.
Currently, prediction market companies continue to expand their operations, despite ongoing discussions about whether they might eventually be regulated under existing gambling laws.
Prediction Platforms Still Hold Tiny Market Share
Despite their growing popularity, prediction platforms currently represent only about 5% of the total funds wagered on sports outcomes. The substantial market share held by established betting platforms remains largely unchallenged.
Traditional sportsbooks have experienced a 40% year-on-year decline in revenues. However, the trading volumes on Polymarket have not yet offset this slide. In parallel, Polymarket faces its own set of challenges, including issues with bots, low liquidity in certain markets, and disputes over resolution outcomes.