CME/FanDuel Deal Greeted Favorably by Wall Street Analysts
Posted on: August 21, 2025, 09:56h.
Last updated on: August 21, 2025, 10:17h.
- One analyst called sportsbooks’ move into prediction markets “enticing”
- Another said CME/FanDuel deal opens the floodgates
- CME, FanDuel announced partnership on Wednesday that will bring financial event contracts to FanDuel customers
Late Wednesday, CME Group (NASDAQ: CME) and Flutter Entertainment’s (NYSE: FLUT) FanDuel announced a partnership through which a joint venture will bring derivatives linked to financial events to the sportsbook’s customers. Wall Street is constructive on the news.
With prediction market operators such as Kalshi and brokerage firms, including Crypto.com and Robinhood, FanDuel’s move into prediction markets is viewed as defensive by some analysts. For now, the CME/FanDuel partnership will focus on yes/no futures tied to fluctuations in cryptocurrency, commodities, and equity index prices as well as economic data. Importantly, it gets FanDuel off the prediction markets sidelines in the US.
Major US online sports betting (OSB) operators have until now largely adopted a ‘wait and see’ approach regarding the opportunity surrounding prediction markets, given the potential stakeholder conflicts,” observes Jeffries analyst James Wheatcroft. “For FanDuel, a partnership with the world’s largest derivatives marketplace helps ensure it is well-positioned to capitalise on emerging event-based contract opportunities and can be agile when launching any new products.”
The CME/FanDuel offering is expected to roll out in the fourth quarter and will be run on a new mobile application separate from the gaming company’s iGaming/sports betting platform.
‘Floodgates Are Open,’ Says Analyst
In a note to clients, Citizens Equity Research analyst Jordan Bender said the CME/FanDuel agreement implies the “floodgates are open” regarding sportsbook operators responding to the competitive threat posed by firms like Kalshi and Polymarket.
There are some regulatory issues that need to be addressed. For example, it’s not yet clear if the CME/FanDuel offering will be available in all 50 states a la Kalshi, which would allow the gaming company to tap into California or Texas, or if it will be confined to the states in which FanDuel currently offers sports wagering. But, it’s clear that FanDuel can now be more nimble in its prediction markets response.
The message is now loud and clear that in the event sports contracts are not made illegal by the Commodities Futures Trading Commission (CFTC), FanDuel is building the framework and infrastructure for an exchange long term if allowed at the federal level,” notes Bender. “Additionally, we see the company in a position to speak more freely in the coming months around its ambitions in the space.”
Sports contracts weren’t mentioned by CME or FanDuel, but should the platform evolve to include those yes/no offerings, the transition would likely be seamless because Flutter’s Betfair unit has offered sports event contracts for more than two decades in markets outside the US.
DraftKings on the Clock
FanDuel and DraftKings (NASDAQ: DKNG) have a US sports wagering duopoly, and with the former having secured prediction markets access, the latter may be compelled to respond over the near term.
We believe partnering with the established derivatives leader CME gives FanDuel credibility as they explore this newer market,” notes Truist Securities analyst Barry Jonas. “We look now for DKNG to make a similar move to position for prediction/event trading and note recent media reports of discussions with the startup Railbird Exchange.”
Jonas also points out that the sports products offered by Kalshi and its competitors are “inferior” to what’s found on DraftKings and FanDuel, but prediction markets are improving their sports menus as highlighted by Kalshi filing to offer football player props, sides, and totals. That could be another impetus for DraftKings and other sportsbook operators to make prediction market moves.
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