DraftKings & FanDuel's Departure from AGA Over Prediction Markets

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Transcript

00:00FanDuel and DraftKings are going to try to operate prediction markets in places where

00:04sports betting is not legal. The AGA clearly thinks that sports prediction markets are very

00:09much like sports betting. So this all came to a head. Tell us more. Yeah, for those of you that

00:15don't know, the AGA, the American Gaming Association, is the main trade and lobbying

00:20group for the sports betting industry, the casino industry, online gaming industry in general.

00:26And DraftKings and FanDuel have been its biggest partners, both making up 71% of combined sports

00:32betting revenue share. They've been part of the AGA for several years and are really instrumental in

00:38getting states to legalize sports betting. And to your point, Craig, now we have a clear departure

00:43where both companies, the biggest members, are now leaving the AGA over what they call is a split

00:49over their stance on prediction markets. DraftKings and FanDuel both plan to launch their own sports

00:54prediction markets within the within the next month or two. And that is a clear departure from

00:59the AGA stance. The AGA has maintained that sports prediction markets are basically sports betting,

01:05and they should be regulated as such on the state level where you have state taxes, you know, state

01:10guidelines, fees, different guardrails and guidelines that so far prediction markets have

01:15not followed companies like Kalshi and Polymarket. They've been sued across multiple states, but so far

01:21they've been allowed to pretty much operate these sports betting products wherever they want to.

01:26And as time has kind of evolved on this issue of prediction markets, which we've obviously talked

01:30about a ton over the past year, the stances of DraftKings and FanDuel have really changed a lot

01:35as well. Initially, it was going to be, you know, we're going to wait this out, see what happens,

01:39see some legal clarity. And now it kind of looks like both companies are really, with this move,

01:44making the kind of committing to the idea that we're not going to get legal clarity for a while.

01:48A lot of people think we're now going to get legal clarity eventually once the Supreme Court

01:53rules on this, which if you know anything about the American justice system, that can take

01:56a very long time. But the real reasoning here is both companies have taken massive stock hits,

02:03FanDuel down about $11 billion in market cap, and DraftKings about $3 billion as well since the

02:08start of the year when these prediction markets really started to take off. So I think that's why

02:13you're seeing them now commit to launching their own. As far as what that will do to their stock,

02:18that will impact their relationship with the rest of the sports betting industry and

02:22other partners and state regulators. That remains to be seen. We've last week talked about Nevada

02:27saying that we're not going to allow DraftKings and FanDuel to be in the state.

02:31Once they do these prediction markets, other states have made those threats. So we'll have to see what

02:35happens there. But it's definitely a huge kind of departure from what we talked about in legal

02:40sports betting. Over the past couple of years, DraftKings and FanDuel were, you know,

02:44the biggest name. So of course, they would be in the AGA. But we've got a much fractured kind

02:48of environment going into 2026 now.