Inside FanDuel Predicts How Flutter plans to offer sports outcome contracts while navigating U.S. betting rules

Flutter Entertainment, the owner of FanDuel, and CME Group unveiled a standalone prediction markets app this month that will let U.S. users buy and sell event contracts tied to sports outcomes, economic benchmarks and other measurable events. The product, branded FanDuel Predicts, is designed to expand access to regulated event trading and is slated to launch in December subject to regulatory approvals and filings. Flutter’s chief executive, Peter Jackson, told CNBC the platform leverages differences between regulated prediction markets and state‑level sports betting frameworks to permit trading in jurisdictions where traditional online sports wagering remains restricted.

Under the proposed structure, FanDuel Predicts will operate as a regulated trading venue for event contracts rather than as a conventional sportsbook taking fixed odds bets. By building the product in partnership with CME Group, which brings a long history of regulated derivatives markets and clearing services, FanDuel aims to position the app as a financial‑market style platform where users effectively trade contracts whose value reflects the market’s collective view of an outcome. The firms say that regulatory safeguards, clearing arrangements and transparent price formation differentiate the service from unregulated betting products and align it with established frameworks for derivatives and exchange traded contracts.

How the model skirts state betting restrictions and the legal rationale

The central legal distinction proponents highlight is that prediction markets structured as event contracts can fall under regulatory regimes distinct from those that govern pari‑mutuel or fixed‑odds sports wagering. Unlike a traditional sportsbook that accepts bets on a sporting result, an organized exchange listing event contracts creates a secondary market where participants buy and sell price exposures. FanDuel and CME argue that this classification, combined with federal and state oversight of derivatives and exchange trading, permits the offering of event contracts in states that have not authorised online sports betting in the conventional sense.

Jackson told regulators and television audiences alike that the platform’s architecture — including the role of an exchange operator, order books, transparency of pricing and clearing arrangements provided by an established derivatives house — is intended to meet the legal and prudential contours that separate financial markets from gaming activity. Legal experts and industry observers caution, however, that regulatory interpretations can vary across states and that the ultimate permissibility will rest on the specific regulatory filings, state reaction and any legal challenges that might follow. The partnership with CME is not only technical but also strategic: a major derivatives exchange brings credibility and institutional controls that may help persuade regulators that the product merits treatment distinct from conventional sports betting.

Consumer mechanics and user experience

From a user perspective the FanDuel Predicts app will present event contracts in a way designed to be accessible: customers will see prices quoted for outcomes and can place orders to buy or sell positions much as they would trade a low‑friction financial instrument. For sports outcomes a contract might settle to one dollar if a specified event occurs and zero otherwise, so the market price reflects the implied probability. That structure allows users in non‑betting states to participate in price discovery and trade exposure to outcomes rather than placing a traditional wager with a bookmaker’s fixed payout schedule.

FanDuel will need to build interfaces and educational material to explain nuanced distinctions to mainstream customers accustomed to sportsbook parlance. That includes clarifying settlement mechanics, margin or collateral rules if any are required, and the tax and accounting implications for retail traders. The presence of a regulated clearinghouse and institutional oversight should, in theory, reduce counterparty risk, but it also introduces new layers of operational complexity that FanDuel must communicate clearly to avoid confusion and regulatory scrutiny.

Regulatory and political friction ahead

Despite the careful framing by Flutter and CME, the launch is likely to provoke close scrutiny from state gaming regulators, attorneys general and federal officials. Some state regulators have explicitly or implicitly signalled that financialised event contracts could be treated as an end‑run around state laws that restrict wagering. Others may welcome a regulated alternative that channels consumer demand into a supervised marketplace with strong consumer protections and compliance controls. The mosaic of U.S. gaming law means that FanDuel Predicts will confront a patchwork of responses as it seeks market access nationwide.

Moreover, the political voices that traditionally oppose expansion of wagering may view the product as undermining local decision making about gambling policy. That could spur legislative responses in certain jurisdictions or trigger enforcement actions if regulators deem the contracts to be unlawful gambling products under state statutes. Companies in the space expect negotiations with state regulators and, where necessary, tailored product rollouts that respect local rules. Legal scrutiny is likely to focus on how the platform is marketed, the presence or absence of order matching between customers, any role FanDuel might play as a counterparty, and whether settlement mechanisms resemble financial trading or gambling more closely in practice.

Market consequences for the sports wagering ecosystem

For FanDuel and Flutter, the move into prediction markets represents both a growth avenue and a defensive hand in a rapidly evolving competitive landscape. The U.S. sports betting market has become extraordinarily competitive, with new entrants and novel product forms emerging. Prediction markets let FanDuel extend its reach to consumers in states that have not legalised online betting while also creating a product that can coexist with its sportsbook offerings in regulated markets. The partnership with CME potentially accelerates institutional acceptance and cross‑selling opportunities, while giving FanDuel a differentiated product suite that blends gaming and financial trading mechanics.

Competitors have already been experimenting with variants of event trading and derivatives based on sports outcomes. The entrance of an incumbent like FanDuel backed by CME marks a pivotal moment that could push regulators and investors to take prediction markets more seriously. That could lead to greater liquidity, more sophisticated instruments and increased institutional participation over time. Conversely, if regulatory pushback is strong in key states, the rollout may be fragmented and limit scale until legal clarity improves.

Consumer protections and responsible gaming concerns

Regulators and advocacy groups will press FanDuel and CME to embed robust consumer protection features. Those include limits on leverage and position sizes for retail participants, clear disclosures on risk and fees, age and identity verification, voluntary and enforced exclusion mechanisms, and tools to mitigate problem trading behaviors. The blending of financial trading ergonomics with gambling psychology raises particular concerns about potential harms; retail traders may misapprehend the risk profile of a tradable event contract even if presented in familiar sports language.

FanDuel has experience implementing responsible gaming measures in its sportsbook products, and the company will likely emphasise similar guardrails for the Predicts app. CME’s institutional compliance capabilities and long history in regulated markets can contribute to robust surveillance, anti‑money laundering controls and market integrity tools, but regulators will demand transparent design and enforceable mitigations to protect vulnerable consumers.

What to watch next

The near term watchlist for market participants and regulators includes the details of regulatory filings, state responses and the exact list of contracts that will be offered at launch. Observers will evaluate whether FanDuel Predicts will initially limit sports contracts to certain jurisdictions, or launch a broader set of economic and political event contracts that carry lower regulatory friction. The level of initial liquidity and the participation of market makers or institutional counterparties will shape user experience and price efficiency. Finally, any early enforcement actions or legal opinions from influential states could establish precedents that determine how quickly prediction markets scale across the broader U.S. landscape.

FanDuel’s move into prediction markets, backed by CME Group, represents a calculated attempt to expand access to event trading while navigating the intricate web of U.S. gambling regulations. By structuring trades as regulated event contracts on an exchange with institutional clearing, Flutter argues it is operating in a different regulatory universe than traditional sportsbooks. The strategy offers a way to reach customers in jurisdictions where online sports wagering is tightly restricted, but it also invites regulatory scrutiny, political pushback and complex consumer protection questions. Whether FanDuel Predicts becomes a durable complement to the sportsbook model or a flashpoint in debates over the legal boundaries of wagering will depend on regulatory responses, litigation risks and how transparently and responsibly the platform is implemented.

Written by Nick Ravenshade for NENC Media Group, original article and analysis.
Sources: CNBC CNBC, Flutter press release Flutter Entertainment plc, Reuters U.S. News, Morningstar via MarketWatch Morningstar.