Kalshi Is Eating FanDuel and DraftKings’ Lunch — Here’s How Much Market Share It’s Taken

If you follow sports betting closely, you have probably heard the name Kalshi come up more and more over the past year. If you are a more casual bettor, it may still sound unfamiliar. Either way, the numbers tell a story worth paying attention to. In the fourth quarter of 2025, Kalshi generated 3.76 million mobile app downloads. That surpassed both DraftKings, which had 2.2 million, and FanDuel, which had 2.5 million, over the same period. A company that barely registered two years ago is now the single most downloaded sports wagering app in the country by quarterly volume. Understanding how that happened requires understanding what Kalshi actually is.

What Is Kalshi and How Is It Different

Kalshi is a federally regulated prediction market platform, not a sportsbook. The distinction matters more than it might seem. When you bet on DraftKings or FanDuel, you are placing a wager with an operator that sets odds and profits when you lose. The house is on the other side of your bet. Kalshi works more like a financial exchange. Users trade contracts on the outcome of real-world events, including sports results, political outcomes, economic indicators, and more. The platform earns a transaction fee rather than taking a position against its users. Prices are set by the market, not by an odds compiler.

Because Kalshi operates as a designated contract market regulated by the Commodity Futures Trading Commission rather than state gaming boards, it can offer its products in all 50 states. Traditional sportsbooks must obtain a license in each state where they operate, which is why you can use DraftKings in some states but not others. Kalshi faces no such barrier. That single regulatory advantage gives it access to massive markets like California, Texas, and Florida where sports betting has not been legalized, allowing the platform to serve tens of millions of potential users that sportsbooks simply cannot reach.

The Growth Numbers Are Hard to Argue With

Kalshi generated an estimated 260 million dollars in revenue in 2025, up roughly 994 percent year over year from 24 million dollars in 2024. Sports-related contracts accounted for approximately 89 percent of that fee revenue, with the NFL season serving as the primary driver. The company recorded 871 million dollars in trading volume on Super Bowl Sunday alone. By early 2026, its monthly active user base had grown from roughly 600,000 at the start of 2025 to more than 5 million. Full-year 2025 downloads of 5.2 million are rapidly approaching DraftKings’ 7.43 million for the year, a gap that was enormous just 12 months earlier.

For comparison, DraftKings reported full-year 2025 revenue of 6.05 billion dollars, up 27 percent. That still dwarfs Kalshi in absolute terms. But DraftKings’ 2026 guidance came in below analyst expectations, contributing to a 13.5 percent drop in its stock price. DraftKings and Flutter, FanDuel’s parent company, have both lost more than half their market value over the past year. Meanwhile, Kalshi’s most recent valuation came in at roughly 11 billion dollars following a Series E funding round in December 2025. The trajectory is unmistakably going in opposite directions.

Why This Is a Real Threat, Not Just a Trend

The concern for traditional sportsbooks is not simply that Kalshi is growing. It is that Kalshi is growing in markets they cannot enter, and doing it with a product that overlaps enough with sports betting to pull casual users away. App analytics firm Apptopia found that roughly 10 percent of DraftKings users were also using Kalshi as of January 2026, and that cross-app overlap has been growing almost every month since August. Every major sportsbook posted negative year-over-year download growth in the fourth quarter of 2025. The addressable pool of first-time sportsbook downloaders is shrinking as the legal betting market matures. Kalshi’s arrival as a nationwide competitor only tightens that squeeze further.

DraftKings and FanDuel have each launched their own prediction market products in response. DraftKings entered 38 states in December 2025 through a partnership with CME Group, giving it access to California, Texas, and Florida for the first time. FanDuel launched in five states with plans to expand. But the sportsbooks face an awkward challenge: their new prediction market products compete with their own core sportsbook business in states where both are legal. And in states where only the prediction market product is available, they are building from scratch against a platform that has a year-long head start, a larger user base, and a brand that has become synonymous with the category.

What Comes Next

The prediction market space is no longer a niche corner of the wagering world. With annual trading volume crossing 44 billion dollars in 2025 and major financial players like Coinbase and Robinhood moving into the space, the competitive pressure on legacy sportsbooks is only going to intensify. Robinhood currently routes more than half of its users’ prediction market activity through Kalshi, but has signaled its own exchange may be coming in 2026. If that happens, the volume currently flowing through Kalshi could be redirected, creating a new competitive layer within the prediction market category itself.

For DraftKings and FanDuel, the next two years will test whether they can successfully pivot to a product they did not invent while protecting the core business that still generates the vast majority of their revenue. For bettors, the short-term result is more options, more competition, and potentially better pricing as multiple platforms fight for the same user. That is rarely a bad thing for the customer, even as it creates genuine headaches for the incumbents.