The emergence of sports prediction markets creates massive risk for FanDuel: if they stand down on entering sports prediction markets, they risk missing what may be the biggest shift in the industry since the repeal of PASPA. On the other hand, entering these markets could jeopardize their state-regulated business model.

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This analysis addresses a precise decision point for FanDuel, the market leader with 40% national market share: What prediction market trading volume would allow FanDuel to effectively “call the bluff” and transition from its top five state sportsbook markets to prediction markets while maintaining equivalent profit?