Pennsylvania prediction-market bill highlights regulatory fissures that complicate Flutter’s US strategy

Pennsylvania lawmakers have introduced bipartisan legislation that would create a state regulatory framework for prediction-market platforms such as Kalshi and Polymarket, while explicitly not prohibiting sports-event contracts. The bill (HB 2711), sponsored by Representative Tarik Khan and co-signed by 24 House members, would require participants to be at least 21 years old and impose consumer-protection and integrity rules similar to those applied to sports betting. However, the draft contains a provision likely to block licensed sportsbook operators such as DraftKings and FanDuel from acting as liquidity providers or market makers in the state, potentially restricting their ability to compete in the nascent prediction-market space.

Flutter faces a repriced US opportunity

The Pennsylvania proposal arrives as Flutter Entertainment, the world’s largest online gambling group, completes its full departure from the London Stock Exchange on 3 August, leaving it solely listed in New York after moving its primary listing there in May 2024. The company’s shares have fallen nearly half this year and roughly 60% over 12 months, cutting its market value from a high of $50 billion to around $19 billion. Ben Robinson, managing partner at Corfai, notes that the stock’s decline “has been driven by the market increasingly questioning a growth story built partly on new states opening.” He points out that Kalshi generated more than $30 billion in volume in June “while operating across markets that conventional sportsbooks still cannot fully access,” reducing the scarcity value of future state licences.

A senior US-based financial analyst quoted by iGB (not named) agrees that prediction markets are a material headwind: “Investors are discounting the future growth of the US legal market, or at least the duopoly between DraftKings and FanDuel.” The analyst adds that the pace of new-state legalisation has slowed, with North Carolina raising taxes and Ohio even considering a bill to end sports betting—a move the analyst calls “pretty bizarre” when prediction markets would remain available.

Regulatory patchwork complicates operator strategies

Pennsylvania’s HB 2711 differs from measures in other states, some of which have tried to ban prediction markets entirely or to tax federally regulated exchanges. North Carolina, for example, recently approved a 6% tax on prediction-market operators while allowing sports contracts without a state licence; Illinois also approved a tax via its state budget. The Commodity Futures Trading Commission (CFTC) is currently suing Illinois and other states, arguing that federally regulated prediction markets are exempt from state laws. The Pennsylvania bill proposes civil penalties of up to $10,000 per violation and up to $50,000 for persistent breaches involving market making or insider trading, with the attorney general able to seek court orders blocking recalcitrant operators—who could then face a fine of $1 million per day.

The requirement that a liquidity provider not “knowingly engage in gaming activity” would effectively bar DraftKings and FanDuel from operating their prediction-market platforms in Pennsylvania. Flutter’s FanDuel unit has already launched a product called FanDuel Predicts via a partnership with CME Group, but Robinson says the start has been “quieter than DraftKings’ product.” Meanwhile, Amy Howe’s abrupt exit as FanDuel CEO in May “suggests the board wanted tighter oversight too,” he adds.

Two paths forward for Flutter’s US business

Chad Beynon, senior gaming analyst at Macquarie, downplays prediction markets’ immediate financial impact, saying it “has been minimal” in states where betting is legal, but concedes that investors are discounting the future growth of the US legal market. The unnamed US analyst outlines two possible routes: “Either Flutter needs to start taking share in prediction markets—perhaps as a market maker rather than through an exchange—or investors need confidence that prediction markets won’t be a serious, long-term headwind.” The analyst expects everything to eventually reach the Supreme Court, with no final answer “before late 2027 at the earliest, and more likely sometime in the first half of 2028.” Until then, “there’s a risk that these stocks trade sideways.”

Robinson’s final warning is about broader market dynamics: the S&P 500’s run to record highs has been carried by a narrow band of AI and mega-cap tech stocks. “So the question isn’t whether New York is deeper than London. It’s which arm of the K Flutter sits on,” he says. “Down around 60% in a year, the risk is it becomes just another mid-tier consumer stock on a bigger exchange.”

International business picks up some slack

Flutter’s reliance on the US is significant but shifting: the US accounted for roughly 40% of group revenue in Q1, but grew only 6% year-on-year, with handle down 9% and US EBITDA down 26%. In contrast, international operations grew 27%, though that was driven largely by acquisitions such as Snai and Betnacional and was broadly flat organically. “For now, the international business everyone stopped talking about is doing the heavy lifting,” Robinson says. The UK division faces its own pressure from the near-doubling of remote gaming duty in April, with Flutter estimating a $320 million pre-mitigation EBITDA hit in 2026, rising to $540 million in 2027.

Despite these headwinds, the senior analyst insists the move to New York was correct: “I still think the US is the gold standard for capital markets.” Robinson, while calling the full exit “premature” in instinct, says “the maths probably supports it,” though he detects “an element of message in the timing too: London doubled gaming duty months before Flutter cut its last tie.”

Allwyn, the newly consolidated operator of Greece’s OPAP and a buyer of US daily-fantasy operator PrizePicks, is watching closely, reportedly weighing a secondary listing in London or New York—a move the US analyst calls “a bit of an arbitrage play” that turns the company into “a big fish in a smaller pond.”