DraftKings is getting into the red-hot prediction markets business, launching technology that allows users to trade contracts related to sports and financial events.
DraftKings said event contracts will be traded in 38 states, and the company will eventually expand into other markets beyond sports and finance, such as entertainment and culture. The sportsbook announced Friday it will launch DraftKings Predictions, a mobile app and web product that will be regulated by the Commodity Futures Trading Commission.
“With our operational footprint, marketing and analytics infrastructure, and advanced in-house technology, we believe we are uniquely positioned to lead this space over the long term,” DraftKings Chief Product Officer Corey Gottlieb said in a statement.
DraftKings said its app is expected to be available on major app stores within days and will be connected to multiple exchanges, starting with derivatives market CME Group.
After having a DraftKings account, users can go into the DraftKings Predictions app, start trading by clicking yes/no questions related to an event (such as an NFL game), and decide how much money they want to bet.
More specifically, users initiate trades and DraftKings acts as a broker, Jeanine Hightower-Sellitto, general manager of DraftKings Predictions, told CBS News.
“We’re processing that order and sending it to the exchange for execution,” she explained.
DraftKings faces increasing competition from prediction markets, including Kalshi and Polymarket, currently valued at $9 billion and $11 billion respectively, which allow users to speculate on prediction market outcomes Sports and other activities.
In October, DraftKings announced its acquisition of federally regulated prediction market Railbird Technologies. At the time, DraftKings said the deal supported its “broader strategy to enter prediction markets.”
Some prediction market platforms that lack sports betting licenses have faced pushback from state regulators. Event contracts traded on the market are regulated differently than sports betting, which is illegal in some states.
Others criticize prediction markets for their efforts to promote sports speculation. NCAA President Charlie Baker recently criticized Calsey on social media after the company submitted a form to accept bets on student-athlete transfer decisions and identities, saying it would threaten “the integrity of the game and the recruiting process.”
