Prediction markets and sportsbooks brace for NFL 'arms race'

The battle for NFL bettors is set to take on a new dimension in 2026, with prediction markets preparing to compete alongside traditional sportsbooks throughout a full football season for the first time.

PENN Entertainment CEO Jay Snowden expects that added competition to fuel heavy spending on promotions, advertising and customer acquisition this fall. However, PENN intends to resist chasing competitors for market share and continue prioritizing the profitability of its sportsbook customers.

"You're going to have prediction markets that are targeting customers for the first football season ever, given the timeline of when they actually went live, was close to Super Bowl last year," Snowden said during PENN's second-quarter earnings call.

"We already assumed it was going to be a very aggressive, irrational marketing spend, advertising, and new customer acquisition approach this football season."

Prediction markets add to NFL betting 'arms race'

FanDuel, DraftKings and Fanatics, the three largest US sportsbooks by handle, all launched prediction market platforms in December 2025.

They joined an increasingly crowded market led by Kalshi, which began offering sports event contracts in 2024, alongside Polymarket and a growing number of other competitors.

While several major US gaming companies have entered prediction markets or are considering doing so, PENN has so far stayed out and focused on improving the profitability of its online sports betting business led by theScore Bet.

"The way we're thinking about it, it hasn't changed in terms of our approach because we anticipated football season being quite the arms race this year," Snowden said.

PENN prioritizes profitability over market share

Rather than matching competitors dollar for dollar on promotions, PENN plans to continue prioritizing the economics of customer acquisition over simply growing betting volume.

That strategy was already evident during the second quarter, when the company reduced marketing toward what executives described as lower-value and unprofitable sportsbook customers.

The move contributed to lower wagering volume but improved marketing efficiency, helping PENN's Interactive segment narrow its adjusted EBITDA loss to $9.5 million, compared with a $62 million loss a year earlier.

Interactive revenue reached $349.4 million during the quarter, while PENN maintained its full-year Interactive adjusted EBITDA guidance of a $20 million loss, even as it lowered its revenue expectations.

Prediction markets become part of sportsbook conversation

PENN's comments reflect how quickly prediction markets have become part of the competitive conversation for major US sportsbook operators.

Flutter Entertainment has described prediction markets as complementary to traditional sports betting while investing in FanDuel Predicts as a longer-term customer acquisition opportunity, particularly in states without legal online sports betting.

Rush Street Interactive has also said it is maintaining a flexible approach as it monitors the growth and evolving regulatory status of prediction markets.

For PENN, prediction markets are another competitor for sports customers rather than a reason to abandon its focus on sustainable profitability.

World Cup provides boost ahead of NFL season

PENN also enters football season following strong engagement during the 2026 FIFA World Cup.

Approximately 70% of PENN sportsbook users wagered on the tournament, while around 45% of those customers placed a soccer bet for the first time.

Executives described the World Cup as a meaningful opportunity to engage and reactivate customers ahead of the NFL season. PENN also reported encouraging early customer and handle trends from its recently launched Alberta operations on a per capita basis.

PENN expects fierce competition during football season

How significantly prediction markets ultimately reshape the US sports betting landscape remains uncertain, particularly as legal disputes involving Kalshi, federal regulators and individual states continue through the courts.

But with several high-profile prediction market platforms heading into their first full NFL betting season, PENN's comments demonstrate that traditional sportsbook operators are already accounting for them when planning for the industry's most important time of year.

Snowden pointed to Michigan, where competition has intensified following the arrival of additional operators, as evidence PENN can compete without abandoning its strategy.

"We already assumed in our projections for the remainder of the year that it would be very competitive," Snowden said, "and we think we're faring quite well in states like Michigan, where we're already seeing an environment like that."