Stifel note shows US sportsbook handle outpacing prediction market taker volume

US sportsbook handle grew faster than taker volume on prediction markets regulated by the Commodity Futures Trading Commission (CFTC) in September, according to a Stifel note. Stifel analyst Jeffrey Stantial estimated that monthly taker volume across the industry reached about $17.7bn, a rise of 27%, while sportsbook handle in reporting states rose 43% month-on-month.

The note reported that regulated prediction markets handled $77 billion in notional volume in September, a 64% increase from the prior month. According to Stantial, taker volume on CFTC-regulated all-or-nothing exchanges made up about 23% of total notional turnover at the two largest US prediction markets. Applying that share across the wider industry implies monthly taker volume of approximately $17.7 billion, which the note said equates to 27% growth. The note treats taker volume, the turnover produced by retail traders, as a closer match for sportsbook handle than raw notional volume.

Within the CFTC-regulated market, Stantial said single-wager sports-only volume rose 23% month-on-month in September to $22.8bn, while volume on combos, which the note describes as effectively all sports, rose 122% to $41.6bn.

Stantial cautioned that the small increase in taker volume seen as the NFL season got underway may be an early warning sign for prediction platforms. He called the outcome counter-intuitive, pointing to consistent product upgrades and heavy spending on user acquisition by multiple brokers and exchanges. In his view, the data may instead indicate faster saturation, along with possible churn driven by large user losses and built-in constraints on retention bonuses.

Volume on domestic prediction markets is largely concentrated on two platforms, the note said, with some Tier-2 operators seen as viable competitors. Stantial said most Tier-2 operators struggled to gain noticeable market share in September, including Rothera, which is jointly owned by Robinhood Markets and Susquehanna International Group. Among those that gained share, DraftKings' DKeX saw notional volume rise 2%, and Novig reached 1.9% share in September after its Sydney Sweeney ad campaign, which the note calls controversial.

According to the note, the platform recorded a surge in Novig app downloads and in first-time depositors after the first Sweeney commercial aired in September.