Lynnae is a journalist covering the intersection of technology, culture, and gambling. She has more than five years of experience as a writer and editor, with bylines at SlashGear and MakeUseOf. On the iGaming side,...
Read Full BioDraftKings has officially entered the prediction market space, announcing the launch of DraftKings Predictions, its new standalone mobile app dedicated to CFTC-regulated event contracts. The Predictions app will be available to users in 38 states, including Texas and California, where sports betting has not been legalized.
In October, DraftKings acquired Railbird Technologies along with its CFTC-designated subsidiary, Railbird Exchange, LLC., in preparation for its entry into prediction markets. Today’s announcement drives home how important prediction markets have become in recent months, as trading platforms and sportsbooks alike look to make sure they’re not missing out on growing demand as prediction markets increasingly move into the sports betting space.
As first reported by CNBC, prediction markets are on track for nearly $1 trillion in annual trading volume by the end of the decade, with sports expected to account for the largest share of that activity, based on estimates from research firm Eilers & Krejcik.
As one of the two largest sportsbooks in the U.S., DraftKings’ foray into prediction markets signals a shift in industry positioning, as trading platforms and sportsbooks alike rush to get a foothold as those markets move closer to core sports betting products. The move comes just two weeks after Fanatics launched its prediction market, and FanDuel prepares to launch its own by the end of this month.
What DraftKings Predictions Offers
In its press release, DraftKings said customers would initially be able to trade on sports and financial contracts, with other markets, including culture and entertainment, to follow later. Like other prediction markets, the company avoided using language related to gambling and sports betting, instead describing the app as allowing users to “trade on real-world outcomes.”
Those contracts are structured around yes-or-no outcomes and are regulated at the federal level through the CFTC, which is different from the state-by-state gaming commission model that oversees traditional sportsbooks.
This difference has become increasingly important as sportsbooks and trading platforms test the limits of just how far prediction markets can push into sports betting, especially as the sports contracts offered by prediction markets look more and more like the kinds of wagers bettors have traditionally placed at sportsbooks, including yes-or-no positions tied to game winners and specific player performances.
DraftKings Chief Product Officer Corey Gottlieb previewed the company’s vision for its prediction market, saying: “We will create an unparalleled customer experience, leveraging key strategic relationships like ESPN and NBCUniversal to provide an authentic, real-time product that moves at the speed of sports.”
The reference to sports in Gottlieb’s statement shows DraftKings’ willingness to engage with the most contentious issue in the prediction market debate.
Nevada Exit & AGA Split Set Stage for DraftKings’ Launch
The launch of the Predictions app comes a little over a month after both DraftKings and FanDuel voluntarily withdrew from Nevada’s sports betting licensing process following objections from state regulators over prediction markets.
In a November notice acknowledging it had accepted the withdrawal of the pending applications, the Nevada Gaming Control Board said: “It has been made clear to the Board that Flutter Entertainment/FanDuel and DraftKings intend to engage in unlawful activities related to sports event contracts. This conduct is incompatible with their ability to participate in Nevada’s gaming industry,” and reiterated that it would take action against “any licensee that pursues illegal sports betting in this manner.”
Not long afterwards, that regulatory tension made its way into industry advocacy, with DraftKings and FanDuel leaving the American Gaming Association, a move that highlighted growing divisions between state-regulated sportsbooks and federally regulated prediction markets.
With the Senate confirming Michael Selig as chairman of the CFTC on December 18, attention is now turning to how the agency will approach sports-related event contracts as challenges continue to play out across state regulators and the courts. When questioned about sports event contracts during the confirmation process, Selig indicated that he’d defer to the courts on unresolved issues and enforce statutes based on judicial decisions.
