In the first quarter of 2026, the US gambling sector is witnessing a notable evolution in regulatory dynamics, highlighted by Flutter Entertainment’s recent earnings call for FanDuel. The discussion centered on the interplay between state-regulated sports betting and federally overseen event contracts, with Flutter reporting initial success for its FanDuel Predicts platform. Launched in December 2025 in partnership with CME Group, this initiative reflects a strategic pivot toward federally regulated markets. Flutter’s management has revised its investment outlook for these areas to approach $300 million, emphasizing potential expansion opportunities. CEO Peter Jackson described this move as a proactive growth strategy rather than a defensive measure against existing operations. That may be a distinction without a difference if they’re heavily marketing to their pre-existing customer base.
This development occurs against a backdrop of increasing scrutiny from industry groups and state regulators. The American Gaming Association (AGA) has intensified its critique, while operators like PENN Entertainment and Caesars Sportsbook have explicitly distanced themselves from similar ventures. States such as Arizona, Michigan, and Massachusetts have issued regulatory advisories or implemented restrictions, underscoring a growing jurisdictional divide. As federally regulated event contracts potentially broaden their reach into non-legalized states, this could prompt legislative reevaluation of traditional frameworks to safeguard state influence and revenue streams.
Flutter Entertainment’s Q4 2025 Earnings: Key Insights for 2026 US Gambling Landscape
Flutter Entertainment’s fourth-quarter 2025 earnings report, released in late February 2026, provided detailed metrics on its US operations, including FanDuel. The company reported quarterly revenue of approximately $4.74 billion, marking a 25% increase year-over-year, though it fell short of analyst expectations. For the full year 2025, revenue reached $16.4 billion, up 17% from the previous year. Adjusted EBITDA for Q4 stood at $1.05 billion, reflecting a 27% rise, driven primarily by US growth, where FanDuel’s sportsbook and iGaming segments expanded by 35% and 33%, respectively.
Looking ahead to 2026, Flutter projected group revenue between $17.75 billion and $19.05 billion, below Wall Street’s $19.34 billion estimate. US-specific guidance anticipates $7.8 billion in revenue and $1.05 billion in adjusted EBITDA, incorporating investments in new states and prediction platforms. The company also plans $300 million in cost savings by 2027 and ongoing share buybacks.
| Metric | Q4 2025 | YoY Change | 2026 Guidance |
|---|---|---|---|
| Group Revenue | $4.74B | +25% | $17.75B – $19.05B |
| US Revenue | N/A | +33% | $7.8B |
| Adjusted EBITDA | $1.05B | +27% | $2.97B (Group) |
| Prediction Markets Investment | $40M (Launch) | N/A | ~ $300M |
These figures illustrate Flutter’s cautious optimism, balancing growth in core areas with strategic allocations to emerging federally regulated segments. Jackson noted during the call that early engagement with FanDuel Predicts has been positive, particularly in sports-related contracts, positioning it as an avenue for customer acquisition in unregulated states like California, Texas, and Florida.
FanDuel Predicts: Strategic Expansion in Federally Regulated Event Contracts
FanDuel Predicts represents Flutter’s entry into federally regulated event contracts, offering sports markets in 18 states and non-sports in all 50. The platform’s launch aligns with the Commodity Futures Trading Commission’s (CFTC) oversight, allowing operations beyond state gambling laws. Management views this as an incremental opportunity, with Jackson stating the potential outweighs any internal competition with traditional betting.
The revised investment guidance to the upper end of $200-300 million underscores confidence in scaling this segment. CFO Rob Coldrake highlighted during the earnings discussion that this spending aims to capitalize on a new total addressable market (TAM) for sports and entertainment-focused users. Analysts note this could accelerate state-level sports betting legalization by demonstrating untapped demand.
Industry Opposition: AGA, PENN Entertainment, and Caesars Sportsbook Positions
The AGA has ramped up its advocacy against unregulated sports event contracts, partnering with the Indian Gaming Association (IGA) in a January 2026 letter to Congress urging action to prevent circumvention of state laws. The groups argue these contracts mirror legal sports betting and should fall under state jurisdiction to protect sovereignty and revenue. AGA’s Chris Cylke emphasized the need for federal legislation to reinforce existing prohibitions.
PENN Entertainment and Caesars Sportsbook have adopted cautious stances. PENN, in its strategic updates, has avoided prediction markets to prioritize its core operations amid restructuring. Caesars CEO Tom Reeg stated in late 2025 that the company would not jeopardize its licenses, viewing these markets as akin to sports gambling. This position persists into 2026, with no indications of entry.
| Entity | Position | Key Statement/Source |
|---|---|---|
| American Gaming Association | Opposition | Urges Congress to prohibit via CFTC platforms AGA-IGA Letter |
| PENN Entertainment | Distanced | Focus on core model restructuring PENN Restructuring |
| Caesars Sportsbook | Distanced | Focus on core model restructuring, PENN Restructuring |
State Regulatory Actions: Warnings from Arizona, Michigan, and Limits in Massachusetts
State regulators have responded variably. Arizona’s Department of Gaming issued cease-and-desist letters to platforms like Kalshi, asserting unlicensed operations. Michigan’s Gaming Control Board warned operators in October 2025 that licenses could be at risk, a stance that carried into 2026. Massachusetts implemented player limits, targeting event contracts in regulatory measures.
These actions reflect concerns over market integrity and consumer protection, with states arguing that federal oversight does not preempt local laws. Litigation in Massachusetts and elsewhere continues, with mixed court outcomes.
Federal Jurisdiction: CFTC’s Role in Event Contracts Expansion
The CFTC has asserted exclusive authority over event contracts, filed amicus briefs, and withdrawn prior restrictive proposals. In February 2026, Chairman Michael Selig emphasized the agency’s supremacy, viewing state actions as encroachments. The withdrawal of a 2024 rule banning certain contracts signals openness to expansion.
This federal stance could facilitate broader access, potentially pressuring states to adapt. Ongoing rulemaking aims to clarify standards.
Implications for Lawmakers, Tax Revenue, and US Gambling Frameworks
As event contracts grow, states may face revenue losses, prompting revisions to legalization frameworks. Analysts estimate an $8 billion shift in handle. Congressional action could resolve jurisdictional ambiguities.
In conclusion, 2026’s gambling landscape is defined by this federal-state tension, with FanDuel’s strategy exemplifying the shift. Outcomes will shape regulatory and economic contours nationwide.
