Is the Sportsbook Era Over? Why Prediction Markets Are Stealing Betting’s Crown

The sports betting sector is being relentlessly consumed by prediction markets, and traditional bookmakers are now in danger of being overtaken by the growing "event trading" obsession.

Gaming analysts predict that handle, or the amount of money wagered, will decrease year over year once first-quarter data for commercial sports betting states that permit internet wagering are revealed and totaled nationwide.

The same-state online sportsbook (OSB) handle fell 2.3% in January and February, according to a report sent on Monday by John DeCree, director of global gaming research at CBRE.

"Initial reports from March suggest that trend has continued. Assuming same-state OSB handle remains down in March, it would be the fourth consecutive month of year-over-year handle declines,” DeCree explained.

According to DeCree, there may be a number of reasons for the reductions in same-state sports betting, but it's difficult to ignore the timing in relation to the "exponential acceleration in sports contracts volumes."

Trading Prediction Markets

Prediction markets, federally authorized trading platforms that enable the purchase and sale of yes/no shares on event outcomes, started experimenting with sports contracts late last year.

Prediction markets that offer sports contracts have been opposed by state attorneys general, casino authorities, and federal and state legislators. the argument that a state's authority to determine what types of gambling and betting are permitted within its borders is hampered by trading.

In states where online sports betting is still prohibited, prediction markets such as Kalshi, DraftKings Predictions, and FanDuel Predicts permit their online platforms to accept sports contract trades.

The Commodities Futures Trading Commission has taken action under the second Trump administration to strengthen prediction markets' ability to provide sports trading.

DeCree claims that the exchanges are reducing OSB handle, at least temporarily, regardless of the legitimacy and future of prediction markets trading sports contracts.

"Some OSB operators have estimated prediction markets could be having a low to single-digit impact on volumes. However, the data suggests the impact could be greater,” DeCree explained. “Monthly same-state OSB handle had been growing at a double-digit pace through November 2025 before turning negative in December.”

Online sportsbooks' bottom lines and margins are inevitably impacted by the topline handle. While DraftKings and FanDuel have disclosed higher costs associated with their prediction market beginnings, BetMGM stated that it is investing more in client acquisition and retention.

The Better Bet: iGaming

Regarding alternatives, DeCree stated that the iGaming sector is still robust and "presents the better long-term opportunity" for online gaming operators, despite being restricted to just eight states.

According to CBRE, iGaming revenue is expected to increase by about 22% in the first quarter. Even the most developed regions, such as Pennsylvania (+17%) and New Jersey (+19%), are still growing.

“Long-term, there remains ample untapped white space for additional state legalization,” DeCree continued.

Maine is the only state that has entered the iGaming market this year.