Imagine a busy train junction. For years, it’s been running smoothly. The NFL and college football train comes in on time, the sports betting train whistles to a stop. Nice, easy, simple.
This year, though, federal and state courts have their own train, gumming things up a bit, but maintaining their … and holy mother of pearl! Look out! The prediction market train is barrelling in! Hide the women and children!
Too much metaphor this early in the day?
Fair. So let me say this: We are on the precipice of massive scale meeting enormous uncertainty. As in, the football season meets prediction market gold rush meets state and federal court cases meets massive marketing meets massive valuations meets legal sportsbooks … well, the angle is that all these things are colliding. And they’re going to collide in, let’s call it, spectacular fashion.
It kind of feels that everything the prediction market scene has been building toward is cresting this autumn.
Anyone have a spare Michael Jackson eating popcorn GIF to spare?
Fire hose
It was a Wednesday in the middle of August. Not an NFL Sunday. Not a CFB Saturday. A Wednesday in the middle of August, when the only American sport with a full slate was baseball.
Captain Jack Andrews said he watched Kalshi do $1.1 billion in volume that day.
“The ceiling has never been higher, because there’s always been a glass ceiling with sports betting, right?” Andrews of Unabated told InGame. “Unfortunately, that glass ceiling was a lot lower than people really wanted it to be, because recreational sportsbooks really took over. Now, with prediction markets, that ceiling is sky-high. It’s eye-popping to me every time I look.”
Andrews is not willing to guess where football takes that number, only that the guesses have gotten absurd.
“So you can imagine when we hit NFL season,” he said. “Will we see $10 billion traded on a Sunday? I think so. Will we see $100 billion? We might. It’s scary to think how much money is going to be traded on these platforms during peak season.”
The preseason offers one comparison. Kalshi handled $162,934 in volume on a Patriots preseason game in August 2025. On a comparable Patriots preseason game this year, it handled $5.8 million (h/t Geoff Zochodne at Covers).
The market makers are already preparing for the deluge. SigmaSquirrel of SharpX Analytics, a market-making firm active on the exchanges, said baseball demand in August has been enough to raise serious questions about how his firm is going to handle Week 1 of the NFL.
“I couldn’t imagine seeing this much volume in August MLB,” SigmaSquirrel said. “Just the demand for MLB combos, there’s so much demand for it that we’re looking at this going, Week 1 of the NFL, we’re going to be fully deployed if we’re not careful. We’re going to be completely deployed immediately, whatever day we launch it and open up the games.
“So we’re looking at it knowing it’s going to be many, many times what anyone has ever seen,” he continued. “After Week 1, we’ll kind of know. But we don’t know now. All we know is it’s going to be a fire hose to the face.”
And the fire hose doesn’t stop with the traders on prediction markets.
Show me the money
Sharp Alpha Managing Partner Lloyd Danzig said the new financing sources are going to make spending by both the prediction markets and the sportsbooks shoot through the roof.
“NFL season always draws an influx of customer acquisition spending by online sportsbooks,” Danzig said. “The rapid growth of prediction markets leading into the 2026 NFL season is driving an especially competitive environment for performance marketing. We run a fund that finances customer acquisition without taking equity. Prediction market companies looking to scale spend into the NFL season have been our busiest inbound category in recent months.”
And it’s spreading to the entire betting (and trading) ecosystem.
“The availability of non-dilutive capital to fund performance marketing drives something of a user acquisition arms race,” he said. “Being outspent by a competitor that unlocked a new source of capital is often the catalyst for seeking additional financing. The escalation in spend and CAC is self-reinforcing, but the market currently believes the paybacks for prediction markets justify it.”
The blitz
Peter Hammon, senior of counsel at Vela Wood, has watched this cycle before.
“Back then it was early days of podcasts, but still, every TV show, every radio show, every sports radio show, every podcast was sponsored by FanDuel or DraftKings,” Hammon said of the 2015 DFS gold rush. “Couldn’t avoid it. If you were half a sports fan, every online ad was for FanDuel or DraftKings. And right now it’s the exact same thing. It seems like the media blitz is full go.”
Hammon expects the blitz to produce partnerships first and a backlash later, on a timeline that runs past this season.
“This to me feels like the season where the advertising will be impossible to avoid,” he said. “And the backlash, much like there was to FanDuel and DraftKings, will grow and grow and grow and crest. And then we will see what happens in 2027.”
Rational meets irrational
Jordan Bender, who covers the sector for investors at Citizens, divides the spending spree into two categories, but both aimed at the same customers.
“For the sports betting piece, these companies know what CAC and LTVs are now,” Bender said. “They understand they can’t go beyond uncomfortable parameters and spend. But on the prediction market side, it does not appear those companies care at this point. They’re willing to spend and spend and spend because they need to build businesses quickly. You have your rational players, you have irrational players, and they meet in the middle here. We probably won’t know where the dust truly settles until early next year.”
The big difference, in Bender’s eye, is not necessarily sportsbook vs. prediction market. It’s more like public vs. private.
“When it’s a private company that has a war chest of money versus a public company that has a war chest of capital, they play by two different rules, because they’ve got to answer to someone,” Bender said. “Public companies are answering public shareholders more short term, where these private companies don’t really have to answer to anyone for the next couple of years.”
DraftKings and FanDuel — two public companies — are spending into it anyway. DraftKings CEO Jason Robins used his second-quarter statement to put a deadline on the effort.
“Predictions is already growing faster than we anticipated,” Robins said. “The similarity of predictions customer metrics to sportsbook customer metrics, our advantaged LTV position, and our playbook to innovate on a leading predictions offering all underpin our confidence that we can win the category this NFL season and beyond.”
Flutter isn’t standing still, either.
“The answer we got was that FanDuel is going to step in pretty hard,” Bender said. “They’re going to spend what will be a drag of $385 million of revenue as they re-accelerate.”
He doesn’t think either company is spending without limits and said the limit is where customer acquisition stops producing anyone worth keeping.
“It’s a very fine line those companies have to take, especially a public company. They have shareholders, they have quarters, and they have to show every quarter that they can beat expectations,” Bender said. “What we saw from Flutter and FanDuel is, ‘Profitability this quarter and next quarter don’t matter, we are in this to win and accelerate the business.’ But they’re not spending recklessly. They could go spend a billion dollars, but at some point that’s not efficient spend. The second you get loose, you’re acquiring customers but not retaining them, because they’re just coming for the free money.”
Other sportsbook companies with no skin in the prediction market game are taking a different approach. Penn Entertainment, for example, has decided to sit the whole thing out.
CEO Jay Snowden told analysts on Penn’s second-quarter call that the company built its forecast around everyone else behaving recklessly.
“You’re going to have prediction markets that are targeting customers for the first football season ever, given the timeline of when they actually went live as close to the Super Bowl last year,” Snowden said. “So we already assumed it was going to be a very aggressive, irrational marketing spend, advertising, and new customer acquisition approach this football season.”
The contraction
Tons of prediction market companies are currently chasing this season. Hammon does not expect all of them to reach the spring.
“When we look up in January, I can’t imagine that the 15, 18, 20 different prediction markets we’re talking about today are all going to be particularly healthy,” he said. “I do think this season will establish winners and losers in the great contraction. There’s going to be a ton of ad spend, a ton of expenses. And if you can’t recoup that money, you’re already in trouble. Some of these companies don’t have enough runway to survive a bad football season that’s supposed to prop up the rest of the year.”
Put simply: There’s not enough bettors.
“There’s not enough retail users, even in a country of 300 million people, to support the number of exchanges we have,” Hammon said. “The market makers will follow the retail money. So that contraction probably starts during the season, where we start to see who are the logical acquirers and acquirees.”
Bender, however, doesn’t think the reckoning arrives that cleanly. He offered the last betting expansion as the precedent.
“For prediction markets to say, after one NFL season, here is the winner and here is the loser, it’s hard to make that conclusion,” he said. “The stat I always give is that 64 companies have tried to do legalized betting in the United States. When the dust settled eight years later, it’s realistically a handful that actually generate cash. It took a long time to get to that point. It’s not going to be like the companies that don’t make it are just gone on Feb. 14. You might lose one or two, or ‘this isn’t for us,’ and over time you start to bleed companies out of this space. You’ll probably see a couple of cycles like that.”
He does, however, expect an issue with the near-literal garage traders.
“Right now there’s a lot of people in garages trading on these markets,” Bender said. “Ultimately, what happens to some of the smaller market makers? Are they eaten up by the institutions, Jane Street, DraftKings trading, Kalshi trading? Those companies trading in the early days, who maybe have an advantage now, aren’t going to have an advantage come next year when all these sophisticated trading companies really get going.”
The fourth train
The legal fight got considerably louder on Aug. 28, when the U.S. Ninth Circuit Court of Appeals ruled 3-0 that sports event contracts are sports bets rather than swaps, clearing Nevada to enforce its gaming laws against prediction markets. The ruling splits with the Third Circuit’s April decision for Kalshi against New Jersey, and New Jersey’s deadline now to petition the Supreme Court to hear its case falls this week. The CFTC’s proposed rewrite of Rule 40.11, which would classify sports contracts as gaming while permitting most of them, remains in public comment period.
None of it changes what happens between now and February, which is why Bender sees the spending as rational even at its current scale.
“Kalshi’s raising capital at a $40 billion valuation, Polymarket’s raising at $20 billion,” he said. “Inevitably, they know there might be some period with a Supreme Court ruling that says this is not allowed, or it’s allowed, or it’s a states’ rights issue, whatever it may be. Until that point, you need to build the strongest business you can.”
Hammon applies the same clock to the sportsbooks and reaches a harder conclusion about what happens if they miss the window.
“If they do not handle the next four to six months well — ‘they’ being FanDuel and DraftKings — and acquire significant market share, good luck to any investors in those companies,” he said. “Because then you’re hoping for a Supreme Court ruling at that point.”
Asked what February 2027 looks like post-football feeding frenzy, Bender, whose job is forecasting this sector, declined to commit.
“It feels like you’re going to get to February and maybe it’s going to feel the same as today,” he said. “But what we’ve seen over the last year and a half is we don’t even know what’s going to happen tomorrow at this point.”
Hammon also demurred, but summed it all up in eight words.
“It’s shaping up to be a fun fall.”
