Kalshi Same-Game Parlays Trigger DraftKings Flutter Market Cap Declines

Shares of major sports betting companies Flutter Entertainment and DraftKings fell sharply after Kalshi, a U.S. prediction markets operator, launched a new same-game parlay-style product for NFL matches. Despite the stock declines, analysts from Jefferies and Texas Capital Securities view the market reaction as an overreaction, noting that Kalshi's offering lacks the comprehensive product depth and pricing advantages of traditional sportsbooks like Flutter and DraftKings. Kalshi's increasing volume, including record-breaking daily turnover, is estimated to have captured 5% to 10% of betting volume from sportsbooks, partially due to its ability to operate in states where sports betting is restricted. The new product allows users to build custom parlays, competing directly with sportsbook offerings and potentially threatening market share as other prediction markets like Polymarket re-enter the U.S. market. Although initial revenue from Kalshi's parlays was modest, the launch has significantly impacted investor sentiment, wiping nearly $7 billion off the combined market value of Flutter and DraftKings. Overall, while Kalshi's innovations present a competitive challenge, analysts maintain a positive outlook for traditional sports betting companies based on their broader market reach and superior pricing strategies.