Kalshi's federally regulated prediction markets are challenging Draftkings, capturing nearly 25% of its sportsbook revenue. Kalshi's sports-related contracts now account for 90% of its platform fees, with an estimated annualized sports revenue of $1.3 billion. This growth comes as prediction markets draw $8 billion away from traditional sportsbooks in the $14 billion U.S. sports gambling market. Draftkings reported a 27% revenue increase in 2025, reaching $6.05 billion, but its 2026 guidance fell short of expectations, leading to a 13.5% stock price drop. Despite launching its own prediction product, Draftkings faces competition from Kalshi's nationwide access under CFTC oversight, contrasting with state-regulated sportsbooks. The competitive landscape in U.S. sports betting is shifting as prediction markets gain traction.