The rise of prediction markets such as Kalshi and Polymarket could be digging into market share of online sports betting companies DraftKings Inc (NASDAQ:DKNG) and Flutter Entertainment (NYSE:FLUT). Prediction markets allow wagers on almost every possible sport.
When it comes to the annual Kentucky Derby, those interested in backing a winning horse will have to turn away from prediction markets and find an online sports betting platform that takes wagers.
• DraftKings stock is trading at depressed levels. What should traders watch with DKNG?
Kentucky Derby Resistant to Prediction Markets, For Now
The 152nd running of the Kentucky Derby takes place on Saturday, May 2, at the Churchill Downs Racetrack at 6:57 p.m. ET. The iconic race and racetrack are owned by Churchill Down Inc (NASDAQ:CHDN).
Those tuning into the race on NBC or Peacock, which are owned by Comcast Corporation (NASDAQ:CMCSA), will place wagers with the likes of DraftKings or Flutter-owned FanDuel, which have partnerships with the race and racetrack.
There is also TwinSpires, an online horse wagering platform that is owned by Churchill Downs.
Prediction market platforms Polymarket and Kalshi are sitting out the 2026 Kentucky Derby and the reason is mostly legal, according to a report from ESPN.
Polymarket had a market open briefly for the 2026 race before taking it down.
"We reached out to Polymarket and asked for the wagers to be removed," a Churchill Downs spokesperson told ESPN. "And Polymarket compiled."
A search for Kentucky Derby on Polymarket shows that there was a 2025 market for predicting the winner of the race with $1.2 million in betting volume. Winning horse Sovereignty had $83,791 in betting handle.
The Legal Issues Blocking Prediction Markets
For now, the Kentucky Derby and much of American horse racing appear to be prediction market proof, which could be good news for Churchill Downs and other sports betting and racetrack operators.
According to ESPN, the Interstate Horseracing Act, created in 1978, gave state racing commissions the power over events to be wagered on at their racetracks.
National Thoroughbred Racing Association CEO Tom Rooney previously warned prediction markets that they cannot offer trades on horse racing. He even sent a letter to the Commodity Futures Trading Commission this month with a warning.
In the letter, Rooney says prediction markets offering wagering would "cause substantial economic harm to the horse racing industry."
Events like the Kentucky Derby mean big dollars for the sport of horse racing. Last year's race saw $234 million in wagers, while the week's events at Churchill Downs brought in another $239 million. A percentage of that betting handle goes to the state for future prize money, to support racetracks and support horse breeding programs.
State legislators in Kentucky are fighting off prediction markets too, with a recent bill based that will make it illegal for state racetracks to cut side deals with prediction markets.
The wagering system for horse racing has been in place for decades and the industry warns that a disruption could change the sport and not in a good way.
Prediction markets have taken over sports leagues with partnerships and are likely taking market share from online sports betting companies, but for now, horse racing won't have to worry for the 2026 Kentucky Derby.
Photo: Shutterstock
Login to comment