Gambling stocks sank ahead of the weekend, affecting even the leader, DraftKings. New data suggested traditional platforms may be losing share to newcomers Polymarket and Kalshi.Gambling stocks as a whole crashed on Friday, after the industry felt expanded pressure from prediction market platforms Polymarket and Kalshi. Draft Kings (DKNG) fell by 7.6%, down to a one-month low of $32.83. Flutter Entertainment (FLUT) is at a six-month low of $190.17, after wiping out 5.6% in the past day. The S&P index for the industry shed 2.5% on average.DraftKings led the drop in gambling stocks, which are facing challenges from prediction platforms. | Source: Yahoo FinanceThe traditional betting platforms did not benefit from a rush to predictions, instead seeking opportunities with the newly launched apps ahead of the NFL playoff season. Kalshi and Polymarket were already surging with peak daily activity and volumes, based on interest in financial predictions. The sports season may further boost user engagement. At the same time, sportsbook platforms are seeing slower revenues compared to the same period of 2025. The shares of DraftKings took a tumble despite the recent announcement that the company would launch its own native prediction markets. DraftKings and Flutter launched new prediction platforms in states where sports gambling is illegal. The platforms are yet to gain traction, and have not outperformed the recent growth of crypto-native prediction markets. Gambling stocks erase their advantagePlatforms like Polymarket, Kalshi, and Opinion are seen as more accessible and more fair markets. The recent stock crash also followed Polymarket’s claim that its predictions do not intentionally curb winning players. Sharps are welcome on Polymarket.No limit. No bans.Unlike sportsbooks, we want you to win. https://t.co/8KbjJDzJvs— Polymarket (@Polymarket) January 16, 2026Polymarket has even encouraged high-profile whales, who often draw more traders through copying strategies.Polymarket responded to a recent leak suggesting sportsbooks calculated player odds and tried to prevent ‘sharps’ or players with a competitive advantage from making winning bets. As a result, sports predictions make up to 90% of volumes on Kalshi.‘We do believe prediction markets are having an impact on the sports betting companies,’ said Jordan Bender, equity research analyst at Citizens, cited by Bloomberg. ‘The PMs are built around large tentpole events like the NFL playoffs,’ he said.Prediction platforms are using their newly regulated status to offer better odds and a fair market for sports wagers. The startups are also offering a prediction service while bypassing gambling laws. For now, prediction market companies continue to expand, despite claims they may have to be regulated under gambling laws. Prediction platforms still hold tiny market shareDespite their popularity, prediction platforms only account for around 5% of the total funds wagered on sports outcomes. The large market share of established betting platforms is not severely challenged. For now, traditional sportsbooks have lost 40% of revenues year-on-year, but the volumes on Polymarket have not offset the slide. At the same time, Polymarket faces its own challenges, including bots, low liquidity markets, and disputed resolutions. Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.