Key Moments:
- Major US and UK gambling companies have experienced substantial share price declines in early 2026.
- Rapid growth in US prediction markets, along with upcoming regulatory shifts, is fueling investor concerns.
- The UK’s Remote Gaming Duty will rise from 21% to 40% starting April 1, 2026.
Market Downturn Impacts Leading Gambling Firms
Investor sentiment has shifted sharply against several high-profile gambling companies in early 2026. This change reflects the rapid growth of prediction markets across the United States.
For instance, Flutter Entertainment, the parent company of Paddy Power and FanDuel, has seen its share price fall over 40% this year. This decline erased roughly $16 billion (£11.9 billion) from its market capitalization. Similarly, DraftKings’ market value dropped by about $5.7 billion, while Churchill Downs lost approximately $1.6 billion, according to market reports.
Furthermore, JPMorgan analyst Estelle Weingrod noted that the sector has been “under pressure” in recent months. She highlighted that the proliferation of prediction markets is contributing significantly to this volatility.
Prediction Markets Reshape the Competitive Landscape
Prediction platforms allow users to trade yes-or-no contracts tied to real-world events. Unlike traditional bookmakers, they earn revenue mainly from transaction fees. Consequently, market-driven prices reflect implied probabilities.
This model has gained momentum quickly. For example, Kalshi reported over $1 billion in trading volume on Super Bowl Sunday, supported by contracts linked to entertainment events such as the halftime show.
As a result, investors in established sportsbooks worry about potential market share erosion. Additionally, there are regulatory concerns. Certain states are debating whether sports-linked event contracts should be treated as gambling products. The companies behind these platforms argue that federal commodities regulations apply. However, the matter remains unsettled, and regulators and courts continue to review it.
UK Operators Face Rising Taxation and Competitive Risks
Although prediction markets have yet to gain traction among UK consumers, local operators are bracing for higher taxes. Remote Gaming Duty is set to jump from 21% to 40% starting April 1, 2026. Analysts believe this may compress margins across the online gaming sector.
Entain, the FTSE 100-listed company behind Ladbrokes and co-owner of BetMGM in the US, is also under pressure. Its valuation dropped by roughly 25% during the same period, a decrease exceeding £1.1 billion, according to market reports.
Imminent UK Prediction Market Launch Heightens Tensions
Market observers report that Matchbook plans to launch a UK-based prediction market soon, presenting it as a regulated product.
With a new US competitor gaining momentum and higher UK tax and compliance costs looming, listed gambling operators face a uniquely challenging competitive and regulatory landscape.
| Company | Change in Value | Reference Period |
|---|---|---|
| Flutter Entertainment | -$16 billion (£11.9 billion) | So far this year |
| DraftKings | -$5.7 billion | So far this year |
| Churchill Downs | -$1.6 billion | So far this year |
| Entain | -£1.1 billion | Same period |
- Author
Daniel Williams
