FanDuel yesterday (20 August) announced a new partnership with Chicago-based derivatives marketplace CME Group to create a prediction markets-focused joint venture.
The move signals FanDuel’s first step beyond traditional sports betting and into regulated event contracts amid rumours its competitors are also positioning them in the space.
FanDuel-owner Flutter is perhaps one of the most equipped to launch here, having for a decade run the world’s most popular betting exchange Betfair, something CEO Peter Jackson highlighted in a recent earnings call.
The joint venture will allow customers to place small-stake “yes or no” wagers, starting at just $1, on outcomes tied to financial benchmarks.
Amy Howe, FanDuel CEO, said: “We believe there is potentially a wide audience for trading event-based markets and we want to provide a platform that allows our customers to engage in this activity.”
Early markets are expected to cover indices such as the S&P 500 and Nasdaq-100, alongside commodities like oil and gold, as well as cryptocurrencies and key economic indicators, including GDP and inflation.
Unlike FanDuel’s sportsbook products, prediction markets are structured more like tradable contracts, allowing users to take positions and manage risk throughout the day.
The partnership draws immediate comparisons to Kalshi, the first exchange regulated by the Commodity Futures Trading Commission (CFTC) dedicated to event contracts, as well as Robinhood, which recently expanded into prediction markets.
While those platforms have dabbled in sports and political outcomes, FanDuel and the Chicago Mercantile Exchange-operator appear committed, at least initially, to keeping their focus on finance and economics.
That distinction may help the new venture avoid some of the regulatory scrutiny faced by competitors offering election or sports-based markets.
Although the JV will not initially offer these, it seems likely FanDuel will launch the currently more controversial product if and when more regulatory clarity is achieved from the CFTC.
Each contract will be fully funded, FanDuel outlined, limiting downside risk for participants and ensuring compliance with federal standards.
Rise of prediction markets
The timing of the launch highlights how rapidly prediction markets are emerging.
Just in the past year, federal regulators have wrestled with how to classify these products, whether as legitimate hedging tools or as a form of gambling dressed in financial language.
Political betting in particular has been a flashpoint, with some exchanges forced to pause or cancel offerings after regulatory pushback.
FanDuel and CME Group’s decision to emphasise financial markets may reflect an effort to sidestep those battles while still capturing growing demand.
For FanDuel, the move also also offers diversification at a time when rising state taxes are squeezing margins in sports betting.
In an investor note, Citizens analyst Jordan Bender explained that FanDuel’s decision to align with a well-established derivatives exchange was an early step toward shaping future opportunities.
He added that the partnership signals that, should the CFTC ultimately permit sports-related contracts, FanDuel is preparing the infrastructure to support a long-term exchange at the federal level.
Looking ahead, the company is also likely to discuss its broader ambitions in prediction markets more openly over the coming months.
By tapping into federally regulated markets through CME’s infrastructure, the company can broaden its customer base and appeal to retail traders who may not otherwise engage with traditional sportsbooks.
He said: “The message is now loud and clear that in the event sports contracts are not made illegal by the CFTC, FanDuel is building the framework and infrastructure for an exchange long term if allowed at the federal level.
“Additionally, we see the company in a position to speak more freely in the coming months around its ambitions in the space.”