Online sportsbooks look to get back on track with Kalshi and Polymarket breathing down their neck

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The sports betting sector is being sized up with three weeks of the NFL season set to be in the books following the Monday night game between the Detroit Lions and Baltimore Ravens.

Needham thinks the structural hold rate for online sportsbooks was likely in line with estimates so far for week 3. That could be considered positive news for DraftKings (NASDAQ:DKNG [https://seekingalpha.com/symbol/DKNG]) and FanDuel owner Flutter Entertainment, because based on released data from New York, the first two weeks of the season saw an overall hold rate lower than what was seen for the first two weeks of 2024. Analysts have pointed to this year as a potential breakout year for betting hold rates with the industry maturing, which would have a positive effect on earnings for the parent companies of the sportsbooks.

Meanwhile, there is also the potential disruption from prediction market companies for investors to weigh. Kalshi highlighted late last week that it has seen a rapid surge in growth that has catapulted the platform to become the leader in prediction markets by crossing $1 billion in monthly volume. Despite being limited to only American customers, Kalshi says it has now risen to dominate the global prediction market industry.

Kalshi noted that it now accounts for 62.2% of global prediction market volume, up sharply from last year when it accounted for just 3.1% of global volume. Kalshi set a single-day transaction record of 588,520 trades on the Sunday of NFL Week 2, highlighting the platform’s recent growth in the sports category and ability to move the meter in the sports betting industry.

Robinhood Markets (HOOD [https://seekingalpha.com/symbol/HOOD]) partners with Kalshi by integrating Kalshi’s CFTC-regulated prediction market contracts directly into the company's app, providing users the ability to trade on the outcomes of NFL and college football games nationwide as regulated event contracts.

Online prediction betting site Polymarket is also about to burst onto the scene. The company has been cleared to launch in the United States on December 1 after receiving approval from the Commodity Futures Trading Commission and completing its acquisition of QCX, a regulated derivatives exchange. The platform has already initiated select access for U.S. users in partnership with Stocktwits, and broader national availability is expected to begin around the December launch date, with initial markets tied to major events such as NFL games.

In general, prediction markets are noted by analysts as having a bigger impact in the 11 states where sports betting is not legal.

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* Kalshi carves out significant market share as the NFL season heats up [https://seekingalpha.com/news/4494774-kalshi-carves-out-significant-market-share-as-the-nfl-season-heats-up]