Prediction markets push NFL customer spending close to sportsbook levels

Prediction-market operators have pushed customer-acquisition spending towards $200 per trader during the NFL season, nearing the roughly $250 that sportsbooks spend per customer. The marketing surge is increasing competitive pressure on established betting companies even though exchanges have not yet taken significant market share in states with legal online sports wagering.

Casino.org reported that Eilers & Krejcik Gaming analyst Brad Allen had heard from marketing and affiliate sources that prediction-market platforms were paying heavily for search advertising, app-store placements and affiliate referrals. Advertising increased around the start of the football season, with some campaigns drawing controversy.

The gap between the two customer-acquisition figures has narrowed sharply from an earlier assumption that peer-to-peer exchange economics would prevent prediction markets from matching the bonuses and promotions used by sportsbooks. Allen said the new operators were well funded and pursuing growth, while sportsbooks faced pressure to demonstrate the resilience of their core businesses to investors.

That leaves sportsbooks with an unappealing choice, Allen said: pay more for customers and accept longer payback periods, or maintain spending and acquire fewer users. Prediction-market companies have been raising capital rapidly, with part of that financing appearing to support promotional competition with bookmakers.

The NFL season nevertheless remained dominated by regulated sportsbooks. CNBC reported that the season was forecast to generate about $40 billion in US wagering activity, including $31.7 billion in regulated sportsbook handle, up about 8% from the previous season. Eilers & Krejcik estimated that prediction markets would generate the equivalent of $8.4 billion, or 21% of the combined market.

Those projections do not yet amount to clear evidence of displacement. Eilers & Krejcik found little sign that exchanges were taking substantial business from sportsbooks, while DraftKings and FanDuel put any drag on their sportsbook-handle growth at low single digits. Rush Street Interactive reported no discernible impact, though BetMGM described a more meaningful effect.

Prediction markets have also expanded the potential customer base by offering sports contracts in California, Texas and Georgia, where sports betting remains illegal, and in Florida, where the Seminole Tribe's Hard Rock business holds a monopoly. Football-contract volume across selected exchanges reached 2.94 billion contracts from Sept. 1 through Sept. 14, nearly four times the comparable period a year earlier.

DraftKings is itself accelerating investment in prediction markets. Its chief executive, Jason Robins, said sportsbook handle was up 15% year over year month-to-date at the beginning of the NFL season, while its prediction-markets product was nearing a double-digit share of consumer volume in sports prediction markets. The company planned to bring forward marketing and promotional investment after early results in states without licensed online sports betting met its efficiency threshold, although the final amount would depend on further data.

That decision was expected to weigh on near-term margins despite DraftKings forecasting about $1 billion in adjusted EBITDA for the current year. Robins said the regulatory and legal position of prediction markets remained unsettled, and DraftKings was building against established platforms including Kalshi and Polymarket.

Flutter Entertainment has also committed material investment through FanDuel Predicts, while Fanatics chief executive Michael Rubin said the company could spend as much as $1 billion on sports-betting advertising in 2027. The spending plans suggest operators may have to keep pace with prediction-market rivals.

The intensifying commercial contest adds a marketing dimension to the competitive and regulatory questions examined in our Sept. 29 report on Bloomberg's look at prediction markets and sportsbooks. Chris Grove, Eilers & Krejcik's partner emeritus, said prediction markets were expanding the overall market for now, but expected more direct competition with sportsbooks by the Super Bowl.