PrizePicks Secures Federal Prediction Market License Following Allwyn International Acquisition

Market Leader PrizePicks Enters Regulated Prediction Markets Amidst Allwyn International Majority Acquisition

In a dual development set to reshape the sports entertainment and prediction market sectors, PrizePicks, a prominent daily fantasy sports operator, has secured a Futures Commission Merchant (FCM) license from the National Futures Association (NFA). This regulatory approval coincides with European lottery giant Allwyn International AG acquiring a 62.3% majority stake in PrizePicks.

The Event in Detail: Regulatory Milestone and Significant Investment

Through its subsidiary, Performance Predictions II, LLC, PrizePicks officially became an NFA member on September 22, 2025, a designation that includes registration with the Commodity Futures Trading Commission (CFTC). This FCM license enables PrizePicks to accept orders from customers for futures contracts offered by Designated Contract Markets (DCMs) regulated by the CFTC, thereby facilitating its entry into the federally regulated prediction market space under a new division, "PrizePicks Predicts."

Concurrently, Allwyn International AG announced its acquisition of a majority stake in PrizePicks. The initial cash consideration for this acquisition stands at $1.6 billion, which implies an upfront enterprise valuation of $2.5 billion for PrizePicks. The deal structure includes a potential additional $1.0 billion if specific performance incentives are met over the next three years (2026-2028), which could elevate the implied enterprise value to a maximum of $4.15 billion. Allwyn plans to finance this substantial purchase using a combination of cash on its balance sheet and debt financing.

PrizePicks has demonstrated robust financial performance, reporting a 60% year-on-year revenue growth in the 12 months leading up to June 2025. During the same period, the company achieved an adjusted EBITDA of $339 million, translating to an initial EBITDA multiple of approximately 7.4x based on its recent earnings.

Analysis of Market Positioning and Strategic Implications

PrizePicks' direct FCM status distinguishes it within the sports entertainment landscape, making it the first platform of its kind to secure such registration from the NFA. This strategic move allows the company to diversify its offerings beyond its traditional daily fantasy sports (DFS) "pick'em" games, which have faced increasing regulatory scrutiny and challenges in various jurisdictions. The FCM license provides a distinct regulatory advantage compared to competitors like Underdog Sports, which offers sports contracts through technology partnerships rather than direct FCM status.

For Allwyn, this acquisition represents its largest investment to date in the United States and a significant strategic expansion into the U.S. sports and entertainment industry. This move diversifies Allwyn's portfolio beyond its established lottery operations in Europe, signaling its ambition to grow its footprint in this strategically important market. While PrizePicks will maintain operational independence, the infusion of Allwyn's capital and global expertise is expected to accelerate its growth and potential expansion into new states.

The broader competitive landscape for prediction markets is evolving rapidly. Companies such as FanDuel have explored similar avenues, with FanDuel having brokered a prediction market deal with CME Group. DraftKings has also been rumored to be considering entry into this space, and Robinhood already operates as an FCM, offering Kalshi's markets to its customers. The direct FCM status of PrizePicks positions it as a key player in this burgeoning market segment.

Broader Context and Industry Outlook

This development underscores a growing convergence between the sports entertainment industry and regulated financial markets. The prediction market sector is experiencing substantial growth, with estimates projecting it to reach $95 billion by 2035, reflecting a compound annual growth rate (CAGR) of 46.8% between 2025 and 2035. The entry of a major player like PrizePicks, backed by Allwyn, is poised to accelerate this growth and attract further corporate and investor interest.

However, the market remains complex, characterized by ongoing regulatory scrutiny and legal challenges. While the CFTC under Acting Chair Caroline Pham has expressed a "pro-innovation environment" for prediction markets, state-level regulators have shown varying degrees of acceptance, leading to legal actions against certain platforms.

Expert Commentary

PrizePicks CEO Mike Ybarra highlighted the significance of the regulatory achievement, stating:

"The honor of being the first sports entertainment platform to receive a FCM registration from the NFA is a testament to our industry-leading compliance and consumer protection programs that both the NFA and CFTC demand."

Ybarra also acknowledged Acting Commissioner Pham for her commitment to "innovation" and "strong regulatory standards," indicating a collaborative approach between industry and federal regulators.

Acting Chair Caroline Pham has consistently framed the prediction market sector as an "important new frontier," emphasizing the need for a framework that balances innovation with robust consumer protection. This regulatory stance suggests a cautious yet encouraging environment for regulated expansion in this domain.

Looking Ahead

The acquisition by Allwyn International is projected to close in the first half of 2026, pending customary regulatory approvals. The successful integration of PrizePicks into Allwyn's portfolio, combined with its new ability to operate in federally regulated prediction markets, will be key factors to watch. Future developments will likely involve PrizePicks leveraging its FCM status to form partnerships with existing DCMs, further diversifying its offerings and expanding its market reach.

Given the fragmented regulatory landscape across states, continued navigation of these complexities will be critical for sustained growth. The actions of competitors, regulatory clarifications from the CFTC, and potential legislative developments at both federal and state levels will shape the trajectory of this rapidly evolving sector in the coming months and years. The strategic interplay between innovation and regulation will define the next phase of growth for prediction markets and sports entertainment companies aiming to capitalize on them.