Here’s How Prediction Markets Are Pinching Sportsbooks

In states where online sports betting is legal, prediction markets aren’t yet eating into significant market share, but they are increasingly proving to be a thorn in the side of traditional operators.

Citing multiple affiliate and marketing sources, Eilers & Krejcik Gaming (EKG) analyst Brad Allen highlights in a new report that prediction markets are spending aggressively this football season—driving up customer acquisition costs across the industry.

Prior to and since the start of the 2026 football season, there’s been a spate of fresh prediction market advertising, some of it controversial. The ubiquity of the ads is undeniable and there’s increasing belief in the gaming industry that sportsbook operators are in a tough spot.

Prediction Markets Surge Promotional Spending

Bonus and promotional spending has long been the lifeblood of the online sports betting industry’s cost- per-acquisition (CPA) model. It was previously seen as unapproachable for prediction markets because as peer-to-peer exchanges, the economics weren’t there to lavish big rewards on attracting and retaining customers.

Prediction markets appear to be finding fixes because as Allen notes, CPA spending is approaching $200 for a prediction market trader — not far off the $250 spent by sportsbooks. The analyst says that’s causing a “headache” for sportsbook operators.

“Prediction markets are flush with cash and looking for growth-over-everything, online sportsbooks need to show strong results to reassure investors about their core business,” says the analyst.

Indeed, all-or-nothing exchanges are raising capital at an impressive pace and it appears they’re using portions of that financing to better compete with sportsbooks on the promotional spending front.

Sportsbooks Between a Rock and a Hard Place

To the frustration of some investors, operators like DraftKings (NASDAQ: DKNG) and FanDuel parent Flutter Entertainment (NYSE: FLUT) remain committed to substantial marketing outlays to defend market share—including building out their own event contract capabilities.

DraftKings executives recently indicated a willingness to spend meaningfully over the next two years to acquire prediction market users, while Fanatics CEO Michael Rubin announced plans to spend up to $1 billion in 2027 on sports betting advertising.

The escalation in sportsbook marketing outlays underscores a tough reality: legacy operators must either match the spending pace of prediction exchanges or risk ceding ground.

“They can either pay more for customers and endure longer payback periods, or hold the line and acquire fewer customers,” Allen concluded.