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FanDuel’s US business grew in the third quarter, but rising costs and unfavorable sports results weighed on parent company Flutter Entertainment. In its Nov. 4 earnings report, Flutter missed analysts’ revenue expectations and lowered its full-year forecasts, citing weaker-than-expected sports results and regulatory challenges in Brazil.
New CEO Dan Taylor nonetheless sees opportunity in prediction markets, where FanDuel is recording rising trading volume. He also remains confident that more US states will legalize online sports betting, despite Nebraska voters rejecting two online wagering measures. A day later, rival DraftKings also cut its 2026 outlook and increased investment in prediction markets.
FanDuel revenue grows as profit shrinks
Flutter reported $3.87 billion in third-quarter revenue, up 2% year over year but below analysts’ estimate of approximately $4 billion, Front Office Sports reported. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 25% to $360 million.
US revenue rose 6% to $1.455 billion, with real-money online casino revenue up 8% and sportsbook revenue up 4%. Average monthly US players increased 12% to 3.9 million, while sports wagering volume climbed 13% to approximately $12 billion.
Profitability weakened sharply, however. US adjusted EBITDA plunged 94%, from $51 million to $3 million. Flutter attributed the decline partly to investment in FanDuel Predicts and its Alberta launch. US sales and marketing expenses increased 16%, while promotional spending reached 6% of wagering volume. That reduced FanDuel’s net revenue margin to 6.8%, down from 7.4%.
Despite the pressure, FanDuel maintained a 36% share of online sportsbook gross gaming revenue in the states where it operates. Its online casino share was 27%.
FanDuel Predicts gains traction
Prediction markets have become a priority for Taylor, who succeeded Peter Jackson as Flutter CEO on Oct. 1.
FanDuel Predicts allows users to trade contracts tied to sporting events and other outcomes. Launched in late 2025, the product has undergone significant improvements, including broader sports markets, fractional contracts, and refer-a-friend promotions. Flutter also moved all sports contracts to Crypto.com’s exchange.
Third-quarter trading volume reached $119 million, up 102% from the second quarter. FanDuel Predicts averaged 66,000 monthly players, a 39% increase from the previous quarter. Taylor said the platform had approximately 140,000 active users in October, when trading volume was 271% higher than in July.
Still, Flutter said prediction market revenue was not material in the third quarter. It expects to maintain investment in the product at similar or higher levels in 2027, hoping to attract customers in states where traditional online sportsbooks remain prohibited.
Market making is another part of the strategy. Flutter’s other US revenue increased 20% to $66 million, driven primarily by market making, which involves posting buy and sell prices to support event-contract trading. Taylor said the company’s market-making operation now trades on several prediction market exchanges, although he did not identify them.
However, rising competition is also increasing costs. Taylor said prediction market operators are spending more on advertising and expects Flutter’s marketing intensity to remain near this year’s level in 2027.
DraftKings is making a similar push. In its Nov. 5 earnings report, the company lowered its 2026 revenue guidance to $6.35 billion-$6.55 billion and adjusted EBITDA guidance to $175 million-$275 million. It cited $650 million-$700 million in planned prediction market investment.
DraftKings said Predictions revenue would be immaterial this year but projected $650 million-$750 million in 2027. More than 1.6 million customers have engaged with the product this year.
Flutter cuts full-year guidance
Flutter lowered the midpoint of its 2026 revenue forecast by $300 million to $17.61 billion and its adjusted EBITDA forecast by $160 million to $2.495 billion. Unfavorable sports results and Brazil’s regulatory situation contributed to the reductions.
The company recorded an $873 million noncash impairment charge tied to Brazil after the government issued a provisional measure Sept. 25 banning online sports betting and casino gambling. Flutter closed its Brazilian operations the following day.
Taylor outlined four priorities:
- Building on FanDuel’s US leadership
- Capturing the prediction markets opportunity
- Improving international operations
- Simplifying the business
Flutter also plans to generate an additional $500 million in cost and capital spending savings by 2029.
Taylor says sportsbooks remain core business
Despite its prediction market ambitions, Flutter remains confident in traditional online sportsbooks. Taylor said prediction markets have had limited effects on betting activity among existing FanDuel customers, pointing to the stronger product offered by regulated sportsbooks.
On Nov. 3, Nebraska voters rejected two ballot measures that would have authorized and regulated online sports wagering. Betting in the state remains limited to licensed racetrack casinos.
Taylor said FanDuel was disappointed by the results but expects more states to consider legalization, citing potential tax revenue and consumer protections offered by regulated markets. He declined to identify which states might act next.
Currently, 39 states and Washington, D.C., allow some form of sports betting.
Flutter will report fourth-quarter results in February, when Taylor expects to provide further details on the company’s strategy. Those results should offer a clearer picture of whether growing US activity and prediction market investment can translate into stronger earnings.
