Kalshi’s Rise Could Stoke Mid-Tier Sportsbook M&A, Says Sensor Tower

Posted on: April 2, 2026, 04:11h. 

Last updated on: April 2, 2026, 04:11h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.
  • Kalshi experienced a boom in Q1 monthly active users
  • Sportsbooks, including some large ones, lost ground
  • Mid-tier sportsbook operators could consider combinations to protect market share

Kalshi added monthly active users (MAUs) at a brisk pace in the first quarter with some of the gains coming at the expense of sportsbooks. That could spark consolidation in the gaming space as operators attempt to defend market share.

Kalshi
A Kalshi advertisement. A research firm says the prediction market’s rise could stoke mergers and acquisitions activity among smaller sportsbook operators. (Image: Kalshi)

In a new report, Sensor Tower points out that in the first quarter, Kalshi’s MAU base surged to 21% from 3% a year earlier, indicating its sports market share is growing. The research firm adds that during the first three months of 2026, established sportsbooks ceded market share, noting that trend coupled with the ongoing strength of the duopoly comprised of Flutter Entertainment’s (NYSE: FLUT) FanDuel and DraftKings (NASDAQ: DKNG) could act as a driving force for consolidation or partnerships among mid-ier sportsbook operators.

This potential downward pressure on revenue for smaller operators could prompt consolidation in the space or possible partnership opportunities with peers or prediction market platforms,” according to the research firm.

Sensor Tower observes that FanDuel, DraftKings, BetMGM, Caesars Sportsbook and Penn Entertainment’s (NASDAQ: PENN) theScore all lost market share in the January through March period.

Assessing Sportsbook M&A Landscape

In short, Sensor Tower is implying that the DraftKings/FanDuel duopoly, the rise of prediction markets and the willingness of foreign competitors such as Bet365 to spend in the US is a potentially toxic brew for sportsbook operators that aren’t the industry’s podium

How that plays out terms of mergers and acquisitions activity isn’t yet clear. Over the past several years, the bulk of sports wagering consolidation activity has centered around buyers bolstering their technological capabilities, not taking out rivals simply to add market share. More recently, acquisitive sportsbooks acquired companies with the licensing needed to participate in prediction markets.

Identifying where combinations could be generated in the sports betting realm is a tricky, speculative exercise. Caesars Entertainment (NASDAQ: CZR) itself is a takeover target while the most likely deal involving BetMGM would be MGM Resorts International (NYSE: MGM) acquiring the 50% of the online gaming firm it doesn’t own.

Privately held Fanatics is engaged with prediction markets through a partnership with Crypto.com and is an unlikely seller of its betting arm, though it previously made an acquisition to boost its US sports betting presence. Last year, rumors surfaced Bet365 is readying for a full or partial sale, but those rumors have since died.

Conflicting Data

The Sensor Tower data imply sportsbooks are falling victim to prediction markets’ growth, but other studies paint different pictures. For example, some research indicates the most likely customer attrition in the sportsbook-to-prediction markets scenario is by way of sharp bettors, who are likely candidates to be limited or booted by traditional sportsbooks.

Likewise, other surveys note that in states where sports betting is legal, bettors widely prefer mobile sportsbooks over yes/no exchanges. Data also indicate that in those jurisdictions platforms such as Kalshi have nabbed only incremental market share from operators like DraftKings and FanDuel.