FanDuel Files New FCM, Racing DraftKings for Full Prediction Markets Stack

When DraftKings and FanDuel entered the prediction markets house, they made basically completely different bets on methods to construct the enterprise. Now each firms have futures fee service provider (FCM) functions pending because the hole between their strategic approaches quickly closes.

DraftKings began as an introducing dealer, connecting prospects to contracts with out holding funds or managing clearing, routed by third-party FCM Wedbush Securities. But it moved early to accumulate Railbird Exchange, a registered DCM, signaling that distribution was all the time a stepping stone towards proudly owning the total stack. FanDuel took a extra direct route, constructing round a full FCM construction from the beginning, however at a value. Audited financial statements for FanDuel Prediction Markets LLC present that CME Group holds a 51% stake in FanDuel Predicts, and takes roughly half of gross income, as reported in Flutter’s Q3 2025 earnings release. FanDuel constructed the product and introduced the viewers, however CME holds a majority stake and takes half the income.

Now FanDuel seems to be pushing for an even bigger piece of its personal enterprise. The firm filed for a brand new FCM registration on April 9 below the entity New Venture III LLC, a transfer that might let it function prediction markets outdoors its present CME-dependent association totally. With DraftKings’ personal FCM software additionally pending, each firms are actually pushing towards the identical vacation spot of full possession of the infrastructure underlying their prediction markets companies.

Why FanDuel’s FCM submitting may develop entry past CME

News of FanDuel’s newest NFA submitting was first reported by InGame primarily based on regulatory tracking from PredictionMarketPulse. It outlines a brand new entity managed totally by FanDuel, with the corporate listed as the only proprietor of 10% or extra and solely FanDuel workers named amongst its principals. The software facilities on one of many core relationships in derivatives markets: the hyperlink between FCMs and designated contract markets (DCMs).

Under NFA guidelines, FCMs are accountable for accepting buyer funds and dealing with the client aspect of trades, together with margin and entry to exchange-listed contracts. But FCMs do not listing contracts themselves. Those are provided on registered exchanges often known as DCMs, which outline and listing the contracts out there for buying and selling.  

In follow, meaning any platform working as an FCM providing prediction markets should hook up with at the least one DCM alternate the place the contracts are listed. That construction underpins FanDuel Predicts, the place contracts are listed on CME’s alternate and accessed by FanDuel Prediction Markets LLC, the enterprise’s non-clearing FCM.

The identical mannequin applies throughout the trade. Prediction market alternate Kalshi, a DCM, has elevated distribution of its occasion contracts by various registered intermediaries, together with Robinhood Derivatives LLC, which serves as an FCM for Robinhood’s platform.

FanDuel’s new FCM application may develop the way it participates in that system. By establishing a separate, absolutely managed FCM entity, the corporate would acquire the flexibleness to hook up with extra DCM exchanges past CME Group. That flexibility also needs to present paths to increased income. According to InRecreation, FanDuel Predicts has to date captured solely a small share of general prediction market activity, with CME-based buying and selling quantity trailing main platforms.

DraftKings and FanDuel diverge on prediction markets method

FanDuel’s chief sports activities betting rival, DraftKings, took a unique method to constructing its prediction markets enterprise, initially structuring its DraftKings Predictions platform round an introducing dealer (IB) mannequin that enables it to connect with a number of exchanges.

According to the NFA’s description, IBs are permitted to solicit and settle for buyer orders however don’t maintain buyer funds. Instead, they join prospects to contracts listed on DCMs, whereas routing accounts by a registered FCM, which manages custody, margin, and clearing.

This distinction separates DraftKings’ mannequin from FanDuel’s present FCM-based construction. While FanDuel operates on the degree of holding buyer accounts and interfacing with clearing infrastructure, DraftKings depends on a third-party FCM to carry out these features, permitting it to deal with distribution and market entry. Through its entity GUS III LLC, DraftKings is registered as an IB and routes buyer trades by Wedbush Securities, which serves because the FCM accountable for custody and clearing. 

Like FanDuel Predicts, DraftKings Predictions initially listed CME Group markets, but it surely expanded to additionally embody markets from Crypto.com earlier this 12 months. Unlike FanDuel’s three way partnership with CME Group, DraftKings’ prediction market providing seems to function with no publicly-disclosed fairness or revenue-sharing tie-in.

DKNG additionally constructing towards a full-stack prediction markets mannequin

DraftKings is constructing out its personal infrastructure additional by way of its acquisition of Railbird Exchange, a DCM, which is able to give DraftKings Predictions the flexibility to listing and function its personal markets fairly than counting on third-party exchanges.

DraftKings has additionally utilized for FCM designation, in accordance with its NFA submitting, which lists its Feb. 27 software as pending. That approval would enable the corporate to carry buyer funds and handle buyer clearing relationships straight, decreasing its reliance on third-party corporations like Wedbush.

Even with its transfer to accumulate a DCM, FCM standing would give DraftKings management over a separate layer of the market construction. While a DCM approval permits an organization to listing and function markets, an FCM allows it to intermediate buyer trades and handle account-level exercise. Moves by exchanges reminiscent of Kalshi to include FCM capabilities counsel that layer may be necessary for supporting extra versatile buying and selling constructions.

DraftKings’ regulatory strikes point out the corporate is working towards proudly owning the total stack of its prediction markets enterprise, spanning distribution, buyer accounts, and alternate infrastructure, fairly than counting on third-party intermediaries.

When may FanDuel’s FCM software be accredited?

FanDuel’s new FCM software stays topic to regulatory approval. While NFA guidance notes that background checks may be accomplished in “six weeks or longer,” real-world timelines present the total course of typically takes considerably longer. The approval course of requires a full evaluation of a agency’s financials, compliance programs, and principals, and isn’t accomplished till all requested supplies are reviewed and cleared.

Recent filings counsel the method can take a number of months. Fantasy sports activities platform Underdog, for instance, applied for FCM registration in April 2025 and was not accredited till January 2026, a roughly nine-month course of.

Because FanDuel already operates a registered FCM, the corporate could profit from beforehand vetted principals and infrastructure, which may shorten the timeline. However, approval stays depending on the scope of the brand new entity and the extent of regulatory evaluation required.

FanDuel alerts shift towards larger management of its market construction

FanDuel’s submitting doesn’t instantly change how its prediction markets product operates, but it surely alerts a possible shift in how the corporate may construction the enterprise finally. If accredited, the brand new entity would give FanDuel Predicts the flexibility to function outdoors its present CME-based framework and hook up with extra exchanges, fairly than counting on a single venue.

The transfer suits right into a wider shift throughout the trade, the place platforms are increasingly competing to control more of the underlying market construction.

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