On Thursday the Two Companies Funding the War on Prediction Markets Told Investors They Are Fine Either Way

Editor's note: TrueEdge builds odds tools and earns affiliate commissions from licensed sportsbooks, including both operators named here. This piece argues those operators have undermined a legal campaign waged partly on their behalf. Read it knowing where our money comes from.

Bloomberg's Power Players conference ran this week out of 731 Lexington Avenue, three days of sports-economy panels timed to US Open week. On Thursday, September 10, two of its speakers were the chief executives of the two largest sportsbooks in the United States. Both were asked about prediction markets. Neither said what the state attorneys general suing Kalshi would have wanted them to say.

Christian Genetski, who runs FanDuel, described the Supreme Court fight as something his company has already insulated itself against. "The advantage for us is, whatever the outcome of the Supreme Court case, we're in pretty good shape." He put the likely decision in late 2027 or early 2028. Then he laid out the hedge explicitly enough that it does not need interpretation: "Whether those are customers we eventually convert when we open those states in a sportsbook, or whether they just become loyal long-term customers of prediction markets and prediction markets sustain, we're OK either way."

Jason Robins, at DraftKings, called prediction markets a huge opportunity and said the company is seeing growth across every product line.

Neither man was being incautious. Both were describing a position their companies have spent eighteen months building. The problem is what that position does to the argument being made in their name in roughly twenty state courthouses.

The argument the states were making

Strip the state AG campaign down to the version that persuades a judge who does not follow this industry, and it is a consumer-protection argument. It says event contracts on sports are sports bets; that they are being offered to people in states that have never voted to allow sports betting; that the venues offering them are outside the licensing, age-verification, self-exclusion and problem-gambling apparatus every licensed book has to fund; and that a federal commodities regulator designed for grain futures is not equipped to police any of it. Forty-three states signed Ohio Attorney General Andy Wilson's July letter rejecting the CFTC's exclusive-jurisdiction claim. That is close to unanimous, and consumer protection is the glue.

It is a good argument. It is substantially weaker on Friday than it was on Wednesday, because the two companies whose licensed, regulated, tax-paying status is the entire contrast the argument depends on have now said, on the record, in front of investors, that they would be comfortable in a world where the contrast disappears.

You cannot hold both. Either event contracts on sports are a consumer-protection problem serious enough to justify felony statutes and emergency injunctions, or they are a channel your largest licensed operator is happy to serve customers through indefinitely. FanDuel has picked. Flutter committed $300m to FanDuel Predicts. The product is live in California and Texas — two states that have never legalised sports betting, which Genetski called "incredibly important to our future."

Read that sentence again with the litigation in mind. The largest sportsbook in America is telling investors that its growth depends on serving sports-event customers in two states that have specifically declined to authorise sports betting, through a channel those states' peers are calling illegal gambling.

The market-making problem, which is worse

The consumer-protection argument has a technical cousin: that prediction markets are not really peer-to-peer, that somebody is always on the other side, and that "no house" is a marketing claim rather than a market structure. Robins has been making that case himself — his objection is that the exchanges are positioned as peer-to-peer when the counterparty is realistically a professional or a market maker.

He is right. He is also one of the market makers.

DraftKings disclosed on its Q1 call in May that it had launched market-making operations, with Robins saying the move "unlocks access to an additional layer of the value chain" and was already generating a positive return. He said there was no reason DraftKings should not be one of the top two or three market makers in the world. Flutter's Peter Jackson said his side began providing market-making services on a major third-party prediction platform in April, and wanted to do it on as many platforms as it could. JPMorgan analysts noted at the time that April volume on DraftKings Predictions was running ahead of its sportsbook handle on a per-customer basis. DraftKings' annualised consumer trading volume on Predictions has since passed $2.3bn, and Robins has said he wants a leadership position in sports predictions before the end of the year.

So the structural critique — there is a house, it is just wearing a different hat — is now a description of a business the critics run. That does not make the critique false. It makes it unusable as a legal weapon, because the remedy a court would order against a market maker on Kalshi is a remedy against DraftKings.

What is actually left, and it is not nothing

Here is what survives, and states should say it plainly instead of dressing it up.

The real state interest is fiscal and jurisdictional. A licensed sportsbook in New York pays a 51% gross gaming revenue tax. A CFTC-registered exchange offering the economically identical position pays none of it. States built a licensing regime, priced it, sold it to legislatures on the revenue, and are now watching an untaxed substitute appear inside their borders — including inside borders where the legislature said no. That is a coherent, defensible, entirely legitimate governmental interest. It is also an argument about money and sovereignty, not about protecting anyone from harm, and the states have avoided making it in those terms because it polls worse.

The NFL, for what it is worth, has drawn the line exactly where the money is. Its August 27 partner slate is DraftKings, FanDuel and Fanatics, with data rights and mark licences — and the agreements pointedly exclude those same operators' prediction-market arms. No Kalshi deal. No Polymarket deal. The league will take a sportsbook's money and refuse the identical company's exchange money, which tells you the distinction being enforced is contractual and reputational rather than principled.

The best version of the other side

The obvious objection: these are executives talking their book at an investor-facing conference, and of course they project calm about a legal risk they cannot control. Nobody stands on a Bloomberg stage and says a pending Supreme Court case could gut their business. Read the quotes as risk management, not as a statement of belief, and the contradiction evaporates.

There is something to that, and it is why the market-making disclosures matter more than the conference quotes. A CEO can say anything at a conference. A capital allocation is harder to take back. $300m into FanDuel Predicts, a market-making desk built and staffed at DraftKings, a live product in California and Texas — those are not postures, they are spend. A company that genuinely believed the product would be found unlawful and shut down does not build the desk.

The second objection is more serious: hedging your business is not the same as abandoning a legal position, and there is nothing hypocritical about arguing that a competitor's unlicensed version of your product should be regulated while you offer a licensed version. That is what every incumbent in every regulated industry does, and it is usually correct.

We accept that, with one limit. It works as long as the argument is about licensing. It stops working the moment the argument is about consumer harm — because harm does not care whose licence is on the app icon, and the states have been arguing harm. If DraftKings and FanDuel want the courts to treat this as a licensing dispute, they will win more often than not and they will deserve to. They should stop letting it be litigated as a rescue.

What we do not know is whether any of this reaches the Supreme Court at all, or whether Genetski's late-2027 timeline holds. What we can see is that on one Thursday in September, in one building on Lexington Avenue, the industry's two loudest voices stopped pretending the outcome was existential. Everyone arguing this case in court should update accordingly.