A House Divided

In addition to battles with regulators and sportsbooks, Kalshi and Polymarket have been sniping at one another, and now DraftKings is getting involved.

May 12, 2026

The Bulletin Board

THE LEDE: Infighting could be a disaster for prediction markets.
ROUNDUP: A look at the stories you may have missed.
VIEWS: Could Kalshi or Polymarket make a play for a sportsbook?
AROUND the WATERCOOLER: WSOP adds dealer-rating system.
STRAY THOUGHTS: 52 factorial.

Sponsor’s Message: Promoting a sustainable, entertainment-first global gaming industry.

Play’n GO is celebrating its 20^th anniversary in 2025. Drawing on that experience from the dawn of the iGaming industry through to today, Play’n GO designs and creates world-class slot games in the online casino space.

Play’n GO wants to see a sustainable industry that puts players first. To realize that vision, Play’n GO:

Creates games designed to be entertaining and fun first
Actively lobbies for increased regulation to keep players safe
Refuses to make games that feature mechanics that we believe to be predatory, such as those that allow players to pay hundreds of times their normal stake to buy into the bonus round directly (‘Bonus Buy’ games)

Now live in over 35 regulated territories around the world, including all US and Canadian iGaming jurisdictions, Play’n GO is the leading provider of entertainment to the online casino industry.

For more info, visit www.playngo.com

The Lede: Welcome to the Prediction Market Wars

Prediction markets are not only fighting battles against state regulators and tribal and commercial gaming, they are also fighting amongst themselves.

Kalshi and Polymarket have long been sniping at one another in between taking shots at traditional sportsbooks.

Kalshi has consistently tried to paint itself as the compliance-focused prediction market, while casting Polymarket as the rulebreaker. “Yes, there's an ‘unregulated, offshore prediction market,’ which is not like Kalshi, NPR’s Bobby Allyn wrote in the appropriately titled column, 2 young billionaires are behind the prediction market boom. They hate each other. “Too many people, Mansour says, confuse Kalshi for that ‘non-American, unregulated platform.’”

Polymarket has called Kalshi a copycat.

In a July 23, 2025 appearance on CNBC’s Squawk Box, Polymarket CEO Shayne Coplan was asked to explain the difference between Polymarket and Kalshi, and curtly said, “Polymarket is Polymarket. And they’re a Polymarket copycat.”

Both companies have fired shots at sportsbooks:

Speaking at the Axios BFD Summit in November 2025, Coplan took direct shots at FanDuel and DraftKings:

“The way that it currently works is there’s a duopoly instituted for sports betting in America… None of them innovate. They all rip off the consumer respectfully. Not that they’re not fun on game day… They can go and ban you if you make money. They can kick you off and they can profile you as a user and change the prices based on you. Like that’s a scam, you know, in traditional finance that’s like a bucket shop. That’s like a scam. Those are illegal.”

Now DraftKings is firing back.

In its Q1 financial report, DraftKings defended its core business and took aim at the idea that prediction markets were a better value than sportsbooks:

“Early third-party data suggests that Predictions customers are experiencing losses more quickly than Sportsbook customers, reinforcing the importance of trust, consumer protections, and operator discipline.”

DraftKings CEO Jason Robins said the reason, in part, is that some prediction markets are “irresponsibly” misleading customers to believe they are up against regular bettors, “when the reality is that most of the money that is being put up is being put up by professional market makers, institutions…I think some people don’t necessarily understand that, and as that becomes more apparent, I think you’ll start to see that they moderate.”

STTP Thoughts: When the shots are coming from inside the house, one has to wonder what the future holds for prediction markets. We’ve seen this same self-defeating pattern play out repeatedly in sports-betting and online-casino legalization debates, where ‘allies’ push for broader legalization while lobbying for self-serving policies that inevitably fracture coalitions and ultimately derail broader legislation. I suspect the same will happen when the Commodity Futures Trading Commission (CFTC) starts laying out its prediction market rules.

Roundup: So Much News; So Little Newsletter Space

New Pennsylvania bill would tax prediction markets [HB 2497]: A new bill in Pennsylvania would impose a 22% tax and a $1 million licensing fee on prediction markets. As STTP noted yesterday, state-level taxation — like this Pennsylvania bill, or the one previously passed in Kentucky — is a new headwind prediction markets will need to navigate.

DraftKings Predictions changes fee structure [Ryan Butler, X]: As first reported by Covers.com’s Ryan Butler, “DraftKings Predictions is moving from a commission structure to a variable fee based on contract price … ‘designed to better align fees with contract value,’ the company wrote in an email to customers.” The new fee structure is $0.01 for contracts priced from $0.01 – $0.19; $0.02 for contracts priced from $0.20 – $0.96; and $0.01 for contracts priced from $0.97 – $0.98.

Views: Could a Prediction Market Acquire an OSB?

Eilers & Krejcik Gaming’s latest U.S. Sports Betting Market Monitor took a look at an interesting idea making the rounds: Kalshi or Polymarket acquiring an online sports betting operator.

The case for (from the EKG Line newsletter):

“The logic: if the U.S. Supreme Court or a new administration strikes down sports event contracts, the regulated sports betting (RMOG) side of the business becomes the golden asset.”

The case against (again, from EKG):

“It’s not a bad idea in theory, but execution is littered with obstacles. State regulators would need to approve such a deal— every single one—and some may use their considerable discretion to simply say no to a PM-OSB combination.
“Then there’s the valuation problem: would OSBs sell at these levels? And who exactly is selling for Kalshi or Polymarket paper right now?”

Prediction markets have completely upended the industry over the last 18 months. And just like every previous sea change, the industry has (over)reacted. Sometimes it looks to shut down the upstart competition, and sometimes it simply absorbs them, but something is different this time around, as the legacy gambling industry has been divided into distinct groups.

Land-based-focused operators
Online-first operators
Operators with a foot in each realm

As I previously noted, these three groups had been playing nice, but prediction markets ended that charade — and let’s be real, it was a charade. As I said when Fanatics followed DraftKings and FanDuel out the AGA door:

“After several years of industry coalescence, there is a clear divide happening within the gambling industry, and it’s making the mid-2010s divisions over online gambling seem quaint by comparison.”

And as I noted in a separate column:

“There’s inter- and intra-fighting in the industry, with companies split over everything from sports betting (the FanDuel/DraftKings on-again-off-again relationship with California tribes) and online casinos (NAAiG members vs. online-first companies) to the rift within the rift caused by prediction markets (with multiple operators splitting from the AGA).”

I noted that the rise of prediction markets was a perfect storm-type event in my most recent feature column, but there was also a confluence of events that made dividing the industry quite easy, as:

Online legalization efforts stalled, and in the case of online casinos, never got going.
States came down with a terminal case of buyer’s remorse and began increasing financial and regulatory burdens.
OSBs looked to find growth in new areas, leading to a cycle of failed media acquisitions and partnerships.
Sweepstakes, and later prediction markets replaced OSBs as the VC and investment darlings, and analysts started asking about profits instead of growth.

That caused the stock prices of online-first operators, who made big bets on continued expansion, to go in the wrong direction.

After being the can’t-do-anything-wrong darlings of the industry, they were suddenly staring at maturing markets and a regulatory environment that started to feel more like an anchor than a tailwind.

The industry, which had been playing nice (I talked about this with AGA President and CEO Bill Miller way back in May 2024; the pertinent discussion starts at around the 15:00 mark), began to come apart at the seams, as survival instincts replaced what had been little more than a gentleman’s agreement to work together.

As I said when DraftKings and FanDuel exited the AGA:

“Big tents certainly have benefits, but they can also cause issues… In the end, this split underscores a fundamental divide in the gambling world: the patient, relationship-driven approach of land-based operators versus the aggressive, tech-fueled sprint of online giants.”

The charade of industry cohesion died, and prediction markets offered the online-first companies a return to the more familiar growth strategy, at the expense of the post-PASPA coalitions — As I’ve said in the past, the decision by DraftKings, FanDuel, et al. to jump into prediction markets is not going to be quickly forgotten by their competitors or state regulators: “If prediction markets don’t win in court, they will have a hard time rejoining the ‘mainstream.’ This is a bold gambit that will either cement their place atop the US online gambling market.”

Which is exactly why the idea of Kalshi or Polymarket acquiring an online sportsbook, while far-fetched, is worth keeping an eye on, because the longer this fight goes on, the further apart the two sides will become, which is likely to lead even bolder decisions.

As I recently put it, “As everyone chases the next big thing… there are several sectors of the industry that are having a come-to-Jesus moment.”