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Forecasts placed on sporting events via Kalshi, the nascent prediction market firm whose appeal has significantly risen since the 2024 US presidential election, are currently generating projected yearly incomes of approximately $1.3 billion.
This amount nearly equals a quarter of the total earnings from sportsbooks for the colossal betting entity, DraftKings, thereby highlighting the growing challenge prediction markets present to established sports wagering providers.
An examination of Kalshi’s data by the FT revealed a dramatic increase in trading activity and associated charges during the previous autumn, coinciding with the commencement of the American football season. As of this month, Kalshi’s projected yearly earnings derived from sports trading comprised roughly 90 percent of all charges collected on its platform.
These projections by the FT were founded upon Kalshi’s openly published pricing models and do not factor in the decreased charges borne by participants within Kalshi’s market makers programme, given that the specific information regarding their fee arrangements and transaction volumes remains undisclosed.
Kalshi chose not to provide a statement.
The number of active monthly users for Kalshi’s application has swelled from 600,000 at the beginning of 2025 to 5.1 million by February 9 of the current year, based on statistics supplied by the market intelligence firm Sensor Tower.
This swift expansion has fueled concerns that forecasting platforms are capturing a portion of the $14 billion US athletic wagering sector.
Stock in major sportsbook entities like DraftKings experienced a sharp decline on Friday, concluding 13.5 percent down in New York, subsequent to the company’s announcement that its anticipated 2026 earnings would fall between $6.5 billion and $6.9 billion — below analysts’ collective projections of $7.2 billion.
Concurrently, Flutter, the proprietor of FanDuel, witnessed its shares plummet by over 11 percent. Both corporations have seen their market capitalization diminish by more than fifty percent within the last twelve months.
Forecasting platforms, including Kalshi, enable patrons to wager on two-choice results of forthcoming occurrences. These platforms have managed to circumvent prohibitions on sports wagering in particular states by asserting that their oversight under the CFTC supersedes state-specific legislation.
This legal matter is currently being contested by various states and indigenous tribal communities, and its ultimate resolution might rest with the Supreme Court.
Both Kalshi and Polymarket experienced a significant increase in transaction volumes following their accurate prediction of Donald Trump as the frontrunner in the 2024 US presidential election, and their growth has persisted continually thereafter.
Meanwhile, a deceleration in sportsbook activity has intensified apprehensions that the proliferation of these forecasting platforms is diminishing the earnings of conventional sportsbooks.
When omitting states that recently permitted sports wagering, the sportsbook handle — which denotes the aggregate amount of funds risked by punters — saw a 2 percent year-over-year decrease in December, based on data compiled by Bank of America.
This marked the initial monthly decrease in activity since a Supreme Court ruling in 2018 paved the way for sanctioned online sports wagering across the US.
The Super Bowl held last week was largely perceived as a barometer of current trends. While the majority of states have not yet disclosed their outcomes, the $133.8 million wagered on the game through Nevada sportsbooks represented the lowest figure in ten years, according to statistics from the Nevada Gaming Control Board.
Kalshi, conversely, reported that transaction volumes pertaining to the Super Bowl, encompassing both wagers on the halftime performance and athletic bets, exceeded $1 billion.
Prominent sportsbook providers have dismissed the notion that they are encountering a fundamental challenge. Jason Robins, DraftKings’ chief executive, stated that in regions where sports wagering is authorized, individuals migrating to prediction markets primarily constituted “clients generating low profits or even losses”.
Robins indicated that for most casual gamblers, sportsbooks presented a more comprehensive offering featuring “superior promotions”, whereas prediction markets served as an “excellent alternative” for residents of states where sports wagering is forbidden.
Brandt Montour, a Barclays analyst, posited that although “sharps” — seasoned sports gamblers who regularly outperform the market — were transitioning to prediction markets, the “typical individual sports bettors” who account for the majority of sportsbook earnings were remaining.
Nevertheless, numerous investors persist in their skepticism, even with prominent sportsbooks promoting their proprietary forecasting offerings. In a communication to shareholders, Robins asserted that DraftKings, which introduced the independent DraftKings Predictions in December, possesses the potential to “become the frontrunner in this burgeoning segment”.
Flutter, the proprietor of FanDuel, which likewise debuted an independent predictions application in December, has maintained that forecasting platforms provide an “additional prospect” for sales within jurisdictions that forbid sports wagering.
Prior to the product’s debut, Flutter’s chief, Peter Jackson, contended that clients in regulated territories would “persist in favoring the more enhanced experience furnished by sanctioned sportsbooks”.
Monique Pollard, an analyst at Citi, observed that figures from Similarweb, a service that monitors online activity, indicated similar degrees of engagement with Kalshi’s website across both regulated and unregulated jurisdictions.
Data from Apptopia, a platform that monitors mobile device adoption, reveals that Kalshi’s application enjoys a slightly, though merely somewhat, greater popularity in states where sports betting sites are prohibited.
The creators of Kalshi have presented their platform as a more equitable method of wagering, given that it lacks a “house advantage” and, in contrast to conventional sportsbooks, generates revenue by imposing a fee per transaction.
Although Kalshi provides opportunities for wagers on diverse subjects, ranging from political events to meteorological conditions — with CEO Tarek Mansour stating it is “enhancing global foresight regarding upcoming events” — athletic bets constitute the majority of its income.