By Antonina Tupikova · Founder, iGaming Times3 min read
Flutter's outgoing CEO Peter Jackson has confirmed FanDuel is content to act as a futures commission merchant directing users to third-party exchanges, positioning the operator ahead of a proposed CFTC rule that would restrict the market-making activities of exchange-affiliated firms. The strategy is forecast to generate $50 million this year, even as overall US performance falls short of plan.
Flutter Entertainment's outgoing chief executive Peter Jackson used the company's second-quarter earnings call on 5 August 2026 to clarify FanDuel's approach to prediction markets: the operator intends to remain a futures commission merchant, channelling customers to contracts traded on registered third-party exchanges, rather than owning the exchange infrastructure itself. The decision is now explicitly framed as a considered strategic choice rather than a gap in the product roadmap.
The timing is significant. The CFTC last week published a notice of proposed rulemaking that would permit exchange-affiliated market makers to operate, but only if they act as bona fide market makers and refrain from taking directional positions on outcomes. Under that proposed framework, a company that owns both an exchange and a market-making arm would face structural constraints that an independent FCM like FanDuel would not.
"This is a very fast-moving space, and there's been news in the last few days around some of the complexities of market making if you own some of the exchange components," Jackson said during the call. "We've just got to be thoughtful that we position ourselves as well as we can, and I think we're happy with the strategy that we have."
FanDuel is in the process of migrating its sports prediction-market volume from CME Group, its existing joint venture partner, to Crypto.com, according to the earnings call. Finance-related prediction-market contracts will remain with CME. The company had previously filed to establish a new futures commission merchant entity, separate from its existing FanDuel Predicts FCM, with no apparent CME involvement.
Meanwhile the competitive landscape has shifted quickly. DraftKings launched its in-house exchange in June 2026, and Fanatics acquired an exchange of its own last month. Underdog and Robinhood, both of which also operate as FCMs, have similarly moved to launch proprietary exchange infrastructure. FanDuel is now the conspicuous exception among the major US prediction-market participants in choosing not to own its distribution layer.
Flutter did not disclose a separate prediction-market revenue figure in its Q2 results, characterising overall performance in the segment as "slower than planned." Market making, however, was described as a bright spot. The company said it expected to generate $50 million from trading on prediction markets in 2026, with the majority of that sum derived from parlay market making.
Flutter CFO Rob Coldrake explained the rationale on the call. "We feel that we've got a real advantage in that place in pricing complex and correlated markets," he said. "As the combo volume increases, we're better placed to take advantage of that. We see that as a really attractive and high-margin segment for us."
Coldrake indicated that volumes into the second half of 2026 were encouraging and that the company would update its prediction-market revenue forecast heading into 2027. Flutter's broader US performance was weaker: US adjusted EBITDA fell from $400 million in Q2 2025 to $119 million in Q2 2026, and US sportsbook revenue declined 15% to $1.03 billion, though handle grew. Flutter cut its full-year adjusted EBITDA guidance to $2.655 billion, partly as it plans to increase promotional generosity to customers after what Jackson described as a period of subdued market activity.
Jackson, who will step down as CEO on 1 October 2026 and be replaced by Flutter president Dan Taylor, said he continued to believe prediction markets were having only a limited competitive impact on the sportsbook. He attributed recent FanDuel softness primarily to unfavourable sports outcomes and a reduction in end-of-year promotions rather than structural cannibalisation. The leadership transition was announced alongside the Q2 results.
The CFTC Rulemaking Has Handed FanDuel an Unexpected Advantage
The most consequential dimension of FanDuel's FCM-only strategy is that regulatory momentum has begun to run in its direction. The CFTC's proposed rulemaking is still in a comment period and is not yet in force, but its direction is clear: regulators are uncomfortable with exchange operators simultaneously acting as market makers with the freedom to take directional positions. If the rule is finalised broadly in its current form, operators that have recently integrated exchange and market-making functions, including DraftKings and Fanatics, will face a choice between separating those functions or accepting the tighter bona fide market-maker restrictions. FanDuel, having never consolidated them, would avoid that decision entirely. The strategic risk Jackson is implicitly pricing in is real, and the comment-period outcome will determine how real it turns out to be.
The Parlay-Pricing Moat Is the Claim That Needs Watching
The $50 million market-making forecast rests heavily on FanDuel's asserted edge in pricing correlated and same-game parlay markets, where small errors in correlation assumptions can produce large mispricing. That advantage, if genuine, would be durable: it derives from FanDuel's years of sports-betting data and its pricing models built on one of the largest US sportsbook customer bases. The counter-consideration is that parlay market making on prediction contracts is still a young activity, and the competitive set is expanding. DraftKings, which has built comparable sportsbook scale, will develop its own correlated-market pricing as exchange volumes grow. Whether FanDuel's head start on parlay data constitutes a structural moat or merely a temporary lead will only become clear once rivals have operated their own exchanges through a full NFL season.
The Slower-Than-Planned Overall Number Is the Tension in the Story
Flutter's decision to describe prediction-market performance as "slower than planned" without disclosing a revenue figure makes it difficult to assess the segment independently. The $50 million market-making figure is a forecast, not a reported result, and it sits alongside a US business that has seen a significant EBITDA decline and reduced its full-year guidance. Congress remains divided on how to classify and regulate prediction markets, and several state-level legal challenges, including actions against Kalshi and Polymarket, continue to create structural uncertainty for all FCMs operating in the space. FanDuel's FCM model may prove to be the right bet on regulatory direction. The underlying US business performance means the cost of being wrong is not trivial.
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