Nine publicly listed iGaming companies tracked by venture fund AVC lost a combined 23% of their enterprise value over the first nine months of 2026, falling from around $149 billion to $115 billion. Flutter Entertainment and DraftKings made up more than 90% of that $34 billion drop, according to AVC, which operates within the 1win ecosystem, even though gambling activity and the wider market kept growing.
Prediction markets are among the forces AVC says are squeezing traditional operators, particularly in the United States. Kalshi is in advanced talks to raise roughly $1 billion at a valuation of about $40 billion, up from the $22 billion its previous round set in May, and the CFTC-regulated exchange has pushed hard into sports contracts, which puts it in direct competition for customers sportsbooks used to have largely to themselves.
DraftKings and FanDuel have answered by building prediction products of their own instead of leaving the category to Kalshi and Polymarket. DraftKings Predictions went live in December 2025, followed in June by the proprietary DKeX exchange, which DraftKings said had reached roughly $3.4 billion in annualised consumer volume and $11.3 billion in annualised total trading volume. Flutter-owned FanDuel has launched FanDuel Predicts as well and expanded its sports and entertainment contracts through 2026.
Listed gambling businesses have also had to absorb regulatory changes. Remote Gaming Duty in the UK went from 21% to 40% on April 1, covering online casino games, slots, poker, and other remote gaming products, with a new 25% remote betting rate due in 2027. Brazil went much further in September, banning online betting after running a regulated market, which hit international groups including Flutter and Entain directly and forced licensed operators to stop taking bets.
Some listed gambling companies actually gained value over the same period, so the decline AVC measured wasn’t spread evenly. The divergence has come alongside another round of consolidation, including September’s agreement between Lottomatica and CIRSA on an all-share merger that would create the world’s second-largest listed gaming and sports betting operator by adjusted EBITDA, behind only Flutter. That deal is expected to close in the second quarter of 2027, pending shareholder and regulatory approvals.
Lower public valuations are changing where capital goes in gambling, AVC argues, with investors increasingly looking at newer formats and infrastructure businesses alongside the established B2C operators. The fund is targeting prediction markets, payments, CRM and retention technology, affiliate tools, compliance, AI, and B2B infrastructure itself, and says it has reviewed more than 300 startups since launching earlier this year.
Comparing Kalshi’s $40 billion with the listed companies isn’t quite like for like, since that number is a valuation under discussion in a private funding round rather than a public-market enterprise value, while AVC’s $149 billion to $115 billion calculation covers enterprise value across its nine-company public sample. Kalshi’s last completed major round still valued it at $22 billion, though how fast investors have moved to talking about nearly double that shows how quickly money has shifted toward prediction markets.
What AVC’s numbers describe, then, is a change in which parts of gambling investors are rewarding rather than a contraction across the whole industry. Flutter and DraftKings remain major operators and are putting money into prediction markets themselves, while higher gambling taxes, Brazil’s ban, and the ongoing regulatory fights over event contracts have made their future earnings harder to price. Kalshi’s fundraising and the proposed Lottomatica-CIRSA merger show capital still flowing into the sector, just into a different mix of companies and products than at the start of the year.