- ▸ FanDuel's new FCM filing signals it wants to operate prediction markets on its own terms, free from the revenue-sharing arrangement that currently hands CME Group majority control and roughly half of gross revenue.
- ▸ DraftKings and FanDuel took opposite paths into prediction markets but are converging on the same goal: owning the full stack of distribution, customer accounts, and exchange infrastructure.
- ▸ Whoever controls that infrastructure controls the economics, and both companies are now racing to get there before the prediction markets category scales.
When DraftKings and FanDuel entered the prediction markets space, they made fundamentally different bets on how to build the business. Now both companies have futures commission merchant (FCM) applications pending as the gap between their strategic approaches rapidly closes.
DraftKings started as an introducing broker, connecting customers to contracts without holding funds or managing clearing, routed through third-party FCM Wedbush Securities. But it moved early to acquire Railbird Exchange, a registered DCM, signaling that distribution was always a stepping stone toward owning the full stack. FanDuel took a more direct route, building around a full FCM structure from the start, but at a cost. Audited financial statements for FanDuel Prediction Markets LLC show that CME Group holds a 51% stake in FanDuel Predicts, and takes roughly half of gross revenue, as reported in Flutter’s Q3 2025 earnings release. FanDuel built the product and brought the audience, but CME holds a majority stake and takes half the revenue.
Now FanDuel appears to be pushing for a bigger piece of its own business. The company filed for a new FCM registration on April 9 under the entity New Venture III LLC, a move that would let it operate prediction markets outside its current CME-dependent arrangement entirely. With DraftKings’ own FCM application also pending, both companies are now pushing toward the same destination of full ownership of the infrastructure underlying their prediction markets businesses.
Why FanDuel’s FCM filing could expand access beyond CME
News of FanDuel’s latest NFA filing was first reported by InGame based on regulatory tracking from PredictionMarketPulse. It outlines a new entity controlled entirely by FanDuel, with the company listed as the sole owner of 10% or more and only FanDuel employees named among its principals. The application centers on one of the core relationships in derivatives markets: the link between FCMs and designated contract markets (DCMs).
Under NFA guidelines, FCMs are responsible for accepting customer funds and handling the customer side of trades, including margin and access to exchange-listed contracts. But FCMs do not list contracts themselves. Those are offered on registered exchanges known as DCMs, which define and list the contracts available for trading.
In practice, that means any platform operating as an FCM offering prediction markets must connect to at least one DCM exchange where the contracts are listed. That structure underpins FanDuel Predicts, where contracts are listed on CME’s exchange and accessed through FanDuel Prediction Markets LLC, the venture’s non-clearing FCM.
The same model applies across the industry. Prediction market exchange Kalshi, a DCM, has increased distribution of its event contracts through a number of registered intermediaries, including Robinhood Derivatives LLC, which serves as an FCM for Robinhood’s platform.
FanDuel’s new FCM application could expand how it participates in that system. By establishing a separate, fully controlled FCM entity, the company would gain the flexibility to connect to additional DCM exchanges beyond CME Group. That flexibility should also provide paths to higher revenue. According to InGame, FanDuel Predicts has so far captured only a small share of overall prediction market activity, with CME-based trading volume trailing leading platforms.
DraftKings and FanDuel diverge on prediction markets approach
FanDuel’s chief sports betting rival, DraftKings, took a different approach to building its prediction markets business, initially structuring its DraftKings Predictions platform around an introducing broker (IB) model that allows it to connect to multiple exchanges.
According to the NFA’s description, IBs are permitted to solicit and accept customer orders but do not hold customer funds. Instead, they connect customers to contracts listed on DCMs, while routing accounts through a registered FCM, which manages custody, margin, and clearing.
This distinction separates DraftKings’ model from FanDuel’s current FCM-based structure. While FanDuel operates at the level of holding customer accounts and interfacing with clearing infrastructure, DraftKings relies on a third-party FCM to perform those functions, allowing it to focus on distribution and market access. Through its entity GUS III LLC, DraftKings is registered as an IB and routes customer trades through Wedbush Securities, which serves as the FCM responsible for custody and clearing.
Like FanDuel Predicts, DraftKings Predictions initially listed CME Group markets, but it expanded to also include markets from Crypto.com earlier this year. Unlike FanDuel’s joint venture with CME Group, DraftKings’ prediction market offering appears to operate without a publicly-disclosed equity or revenue-sharing tie-in.
DKNG also building toward a full-stack prediction markets model
DraftKings is building out its own infrastructure further via its acquisition of Railbird Exchange, a DCM, which will give DraftKings Predictions the ability to list and operate its own markets rather than relying on third-party exchanges.
DraftKings has also applied for FCM designation, according to its NFA filing, which lists its Feb. 27 application as pending. That approval would allow the company to hold customer funds and manage customer clearing relationships directly, reducing its reliance on third-party firms like Wedbush.
Even with its move to acquire a DCM, FCM status would give DraftKings control over a separate layer of the market structure. While a DCM approval allows a company to list and operate markets, an FCM enables it to intermediate customer trades and manage account-level activity. Moves by exchanges such as Kalshi to incorporate FCM capabilities suggest that layer can be important for supporting more flexible trading structures.
DraftKings’ regulatory moves indicate the company is working toward owning the full stack of its prediction markets business, spanning distribution, customer accounts, and exchange infrastructure, rather than relying on third-party intermediaries.
When could FanDuel’s FCM application be approved?
FanDuel’s new FCM application remains subject to regulatory approval. While NFA guidance notes that background checks can be completed in “six weeks or longer,” real-world timelines show the full process often takes significantly longer. The approval process requires a full review of a firm’s financials, compliance systems, and principals, and is not completed until all requested materials are reviewed and cleared.
Recent filings suggest the process can take several months. Fantasy sports platform Underdog, for example, applied for FCM registration in April 2025 and was not approved until January 2026, a roughly nine-month process.
Because FanDuel already operates a registered FCM, the company may benefit from previously vetted principals and infrastructure, which could shorten the timeline. However, approval remains dependent on the scope of the new entity and the extent of regulatory review required.
FanDuel signals shift toward greater control of its market structure
FanDuel’s filing does not immediately change how its prediction markets product operates, but it signals a potential shift in how the company could structure the business eventually. If approved, the new entity would give FanDuel Predicts the ability to operate outside its current CME-based framework and connect to additional exchanges, rather than relying on a single venue.
The move fits into a wider shift across the industry, where platforms are increasingly competing to control more of the underlying market structure.
