DraftKings is set to launch microbetting on its prediction market platform. The company is launching its own prediction market platform, DraftKings Exchange, and the operator looks set to replicate its sportsbook product with a wide range of contracts available.
For some, this could be a sign that the company is continuing to innovate and release new products; for others, it is exploiting loose regulation and targeting vulnerable users. DraftKings is already facing a lawsuit over claims it is using microbetting to encourage problem gambling.
DraftKings Exchange Submits Filings To CFTC
DraftKings Exchange submitted its first filings with the Commodity Futures Trading Commission (CFTC) last week. The filings include one titled GAMEPROPERTY, which would see the platform offer markets under the format, “Will [property] occur in [time period] of [event]?”
This could see markets on the outcome of the next drive in a football match, or whether there will be a goal in the next five minutes of a soccer game.
Other filings include ENTITYSTAT, which would offer markets in the format, “Will [entity] record [condition] [count] [statistic] during [time period] of [event]?”
This would allow markets on a wide range of player props, including baseball pitches, basketball stats, and a golfer’s number of birdies, amongst many more. The ‘time period’ section would allow in-play betting on small windows during matches, as well as broader wagering on full games and seasons.
In response to several high-profile betting scandals, DraftKings CEO Jason Robins said the company has reduced some of the markets it offers on its sportsbook, such as pitch-by-pitch baseball betting. The filings do not make clear whether these markets would be offered on its prediction market exchange.
He also said that banning prop betting would be ‘crazy’. The expansion of similar markets into prediction markets, which many see as less strictly regulated, is likely to receive backlash.
Player unions have urged the CFTC to prohibit markets relating to individual player performances, arguing they increase abuse towards athletes and pose a risk to sporting integrity.
DraftKings Exchange Launch Imminent
Currently, DraftKings offers prediction markets through partnerships with other operators, namely Crypto.com and CME. The markets are available on the DraftKings Predictions platform.
However, it acquired Railbird Exchange last year, a Designated Contract Maker (DCM), which can create its own markets. Other DCMs include Kalshi, Polymarket, and Crypto.com.
The company has made no secret that it sees prediction markets as a huge opportunity to expand its reach into states that have no legal sports betting.
“This is the most bullish I have ever felt about the future of DraftKings,” said co-founder and CEO Jason Robins on prediction markets last year. “We will pursue this opportunity, we will compete, and we will win,” he added.
Co-founder and President Paul Liberman hinted the company would launch micro markets earlier this month.
“I think that in sports, we’re gonna see faster, more dynamic micro markets appear that don’t exist yet. We’ve seen that already with RFQs and parlays,” he stated. “I think you’re gonna continue to see innovation there in terms of how dynamic the prediction markets are gonna be able to be on sports.”
Innovation or Regulatory Arbitrage?
“To call this ‘innovation’ is a bit of a stretch,” Robert Walker told CasinoBeats. Walker recently wrote a book on DraftKings, which partly praised the company’s rise, but also criticized the methods it increasingly uses to maximize profits.
“The technology and the markets for microbetting—wagering on the next play, the next pitch, or the next drive—are already mature and widely available in every legal, regulated sportsbook jurisdiction in the country,” Walker added.
“The real ‘innovation’ here isn’t the product; it’s the regulatory arbitrage. The industry is essentially trying to use the ‘prediction market’ label as a backdoor into massive markets like California, Texas, and Florida, where traditional sports betting remains tied up in legislative or tribal hurdles.”
Microbetting Makes Economic Value Argument Fall Apart
Arguments that prediction markets are not gambling look increasingly difficult to make as the range of markets expands to include microbetting.
“The industry’s defense for prediction markets often hinges on the ‘hedging’ argument—the idea that these markets serve a legitimate economic purpose, like the Kalshi example of a t-shirt vendor hedging against a Super Bowl outcome. But that logic completely falls apart when applied to microbetting,” said Walker.
“There is no valid business or economic risk that is mitigated by ‘hedging’ whether the next play is a run or a pass. If we start labeling 30-second sports outcomes as ‘economic predictions’ just to bypass gaming laws, the distinction between a prediction market and a sportsbook disappears entirely. At that point, the legal framework for the entire sector starts to crumble under its own lack of logic.”
Robins Admits Prediction Markets Carry Same Risks As Betting
Robins himself admitted that the difference between sports prediction markets and sports betting is minimal.
In the company’s Q1 earnings call, he said it is irresponsible to suggest that prediction markets are different because they are peer-to-peer, when in reality, users are often wagering against market makers, which essentially act like bookmakers.
“I think part of it is that predictions operators, some of them anyway, are sort of irresponsibly saying that this is not the same as a product like ours, because you have people playing against each other on prediction markets, when the reality is that most of the money that is being put up is being put up by professional market makers, institutions, things like that,” he said.
His fellow DraftKings co-founder, Matt Kalish, has been outspoken on social media recently against Kalshi over the company’s insistence that it is not a gambling product. Like Robins, he said that users are usually up against institutional market makers with huge resources.
DraftKings and FanDuel have also admitted that they see prediction markets as a chance to expand their trading capabilities. The launch of micromarkets is further evidence that DraftKings will be front and center in the race to monetize the opportunity presented by prediction markets. And as Walker’s book states, “The House Always Wins”.
