Flutter doubles down on prediction markets as Q2 earnings come under pressure

Flutter Entertainment is accelerating its push into prediction markets despite mounting pressure on short-term earnings, moving FanDuel Predicts‘ sports and novelty contracts to Crypto.com‘s exchange while increasing investment in new products, market-making operations, and a unified nationwide platform ahead of the NFL season.

The company said prediction markets remain a long-term growth opportunity that complements, rather than replaces, traditional sports betting. The strategy comes as Flutter reported weaker second-quarter profitability, lowered its adjusted EBITDA outlook, and announced a leadership transition with Chief Executive Peter Jackson set to step down at the end of September.

Crypto.com deal anchors prediction markets push

The Crypto.com integration forms a central piece of Flutter’s strategy to deepen its FanDuel Predicts offering before football season. Customers will retain access to CME’s financial markets under the arrangement, which executives said will allow new products to launch more quickly and improve the overall customer experience.

The company is also developing a unified, nationwide app that combines its sports betting and prediction market platforms.

Executives told investors that prediction markets remain a long-term growth opportunity capable of expanding, rather than replacing, traditional online sports betting.

Chief Executive Peter Jackson said Flutter continues to view prediction markets as “complementary” to regulated sportsbooks, and the company has seen only limited cannibalization among existing sportsbook customers.

FanDuel Predicts has also reached consumers in states including California and Texas, where sports betting has yet to be legalized.

“We continue to see prediction markets as incremental to sports betting and iGaming, growing the overall market by capturing new demand,” Jackson said.

Aside from the Crypto.com partnership, Flutter is pursuing a second prediction markets revenue stream through market-making services. Executives said the company is leveraging years of sportsbook pricing and risk-management expertise to become a market maker across prediction-market platforms, with roughly $50 million in market-making revenue expected during 2026.

Chief Financial Officer Rob Coldrake said growing trading volumes have increased management’s confidence that market-making could become a meaningful long-term, high-margin business.

“Our ambition here … is to establish a leading position in this space by leveraging the pricing and risk management and the trading capabilities that we’ve got developed over the years with our sportsbook,” Coldrake said, “and we feel that we’ve got a real advantage in pricing complex and correlated markets.”

Financial pressure drives investment timing

The Crypto.com migration and wider prediction markets buildout arrive as Flutter reported second-quarter results showing financial pressure from increased investment and what executives described as a “more challenging” operating environment.

Overall corporate revenue rose 3% year over year, but adjusted EBITDA fell 45% as the company absorbed higher UK gaming taxes while spending more on prediction markets and World Cup marketing.

Flutter posted a net loss of $296 million, compared with net income of $37 million a year earlier. The company lowered its overall midpoint adjusted EBITDA guidance by $210 million, a reduction of more than 7%.

Flutter’s US business, its largest growth driver in recent years, saw revenue fall 6% from Q2 2025, with “customer-friendly sports outcomes” weighing on sportsbook hold despite strong engagement during the NBA Finals and World Cup. Year-over-year adjusted EBITDA in the US dropped roughly 44%.

Jackson said Flutter has historically created shareholder value by investing through periods when near-term earnings suffered, citing FanDuel investments made in 2019 and 2020 as an example of a strategy that ultimately paid off.

“We recognize that this weighs on near-term earnings, but we’re convinced it’s the right thing to do to maximize long-term shareholder value,” Jackson said.

“We’re making the same type of decision again today,” Jackson said, arguing that increased investment in FanDuel’s sportsbook and iGaming products would better position the company for future growth despite the drag on short-term profitability.

Management said traditional sportsbooks continue to perform well when marquee sporting events drive customer engagement.

Jackson said FanDuel experienced record engagement during both the NBA Finals and FIFA World Cup, reactivating 2.3 million customers during the tournament while continuing to see only low-single-digit cannibalization from prediction markets.

Executives argued those results support their view that sportsbooks and prediction markets can coexist, with prediction markets serving as an additional customer acquisition channel rather than replacing traditional wagering.

Regulatory questions loom over sector

Flutter’s Crypto.com arrangement comes as prediction markets remain one of the gambling industry’s fastest-growing and most contested sectors. The industry’s growth has unfolded alongside ongoing litigation over the Commodity Futures Trading Commission’s authority to oversee sports event contracts.

Executives noted that regulatory questions surrounding prediction markets are ultimately expected to be resolved by the US Supreme Court.

FanDuel, along with fellow sportsbooks-turned-prediction market operators DraftKings and Fanatics, competes with Kalshi, Polymarket, and a growing number of companies in the space.

Despite lowering full-year adjusted EBITDA guidance to account for increased customer investment, management said the additional spending is intended to position FanDuel’s competitive standing before football season and support renewed market share gains beyond 2026.

“We want to invest behind the momentum we’re seeing at the moment,” Jackson said. “This is a proactive decision that we’re making around the longer-term US opportunity.”

The earnings release also marked the start of a leadership change. Jackson announced he will step down at the end of September after nearly nine years as chief executive, with Dan Taylor, CEO of Flutter’s International Division, set to take over.