DraftKings plans to accept sports event contracts in states where it doesn’t offer its sportsbook, teeing up significant legal challenges and potentially upending the existing state-by-state sports betting regulatory structure.
Key Takeaways
- DraftKings expands beyond sportsbooks: The company plans to launch “DraftKings Predictions,” a sports event contracts platform targeting major non-sportsbook states like California, Texas, and Florida.
- Legal and regulatory hurdles loom: The move could spark court battles and risk DraftKings’ existing licenses as regulators weigh whether prediction markets constitute illegal gambling.
- Industry impact and strategy: DraftKings joins Kalshi and Polymarket in testing the federal legality of prediction markets.
The company intends to launch DraftKings Predictions “in the coming months,” CEO Jason Robins announced in a corporate earnings report Thursday. In a letter to shareholders, Robins wrote DraftKings’ prediction market will focus on the roughly two-dozen states it doesn’t offer its real money sportsbook product, jurisdictions where the company believes “the vast majority of financial opportunity exists.”
Those targets would seem to include California, Texas, and Florida, which combined represent roughly 25% of the U.S. population. DraftKings Sportsbook is only available to about 50% of the country.
Challenges abound
Launching a prediction market would not come without significant pushback.
Tribal gaming stakeholders in California and Florida, which have exclusive control of their respective state’s regulated gambling markets, have spent millions of dollars defeating gambling expansion outside their purview. Texas politicians have also railed against gambling and would appear eager to fight back in court if DraftKings Predictions launches in the state.
DraftKings, like upstart prediction market operators including Kalshi and Polymarket, is seemingly banking that its product’s existence will be vindicated by the federal courts. Existing prediction market operators have argued that they are akin to financial commodities trading platforms permitted by federal law and not subject to state-level regulations.
Gaming industry experts expect the legality of prediction markets to be appealed to the Supreme Court. Such a ruling would be years away.
DraftKings could also jeopardize its existing sports betting licenses. Several state regulators have said a prediction market could lose its ability to offer real-money sports betting in their jurisdiction even if they offer sports event contracts somewhere else.
Background
Prediction markets offer sports event contract where users trade on a game’s outcome. That could include a team’s chances to win or lose, win or lose against a predetermined spread, or finish above or below a predetermined combined point total. Users can buy or sell contracts before and during games at fluctuating prices set by the market.
These offerings mimic moneyline, spread, and totals bets at regulated sportsbooks to the point that regulators in a growing number of states have deemed them an unregulated and illegal form of gambling. Many of these state regulatory bodies have tried to legally force prediction market operators to stop accepting customers.
The prediction markets have challenged these moves, including in major gambling states such as Nevada and New Jersey. Courts have offered conflicting rulings across multiple states for and against the prediction markets, increasing the likelihood that the issue will be resolved by the Supreme Court.
"If you can move forward with prediction markets and sports gambling, what would stop you from offering prediction markets and contracts on the next spin of a slot machine, the next hand of blackjack, the next spin of the ball for a roulette table? This is existential."
— Chris Grove (@OPReport) November 6, 2025
Some… pic.twitter.com/wp7gF7XIof
In the meantime, Kalshi and Polymarket have announced a wave of high-profile partnerships including with Google and the NHL. Other major companies including Crypto.com, Robinhood, and the parent company of the New York Stock Exchange have invested millions in prediction markets and/or announced plans to launch their own.
With its legality in limbo, Kalshi has continued to operate in all 50 states. Polymarket, which was forced to cease operations in the U.S., acquired a separate licensed prediction market earlier this year and is set to go-live shortly after the U.S. government shutdown ends.
Sportsbooks respond
Prediction markets offer far fewer betting options than existing sportsbooks and only take in a fraction of the betting volume. Still, legacy operators including DraftKings have become increasingly concerned about these would-be competitors’ long-term viability and the threats to their financial bottom lines.
Officials from BetMGM, Caesars, BetRivers, and theScore Bet had said on their respective third-quarter corporate earnings calls in recent weeks that they were monitoring prediction markets’ viability but would not take action until their legality was resolved. FanDuel, DraftKings' major market share rival, had also expressed a wait-and-see approach ahead of its parent company’s third-quarter earnings announcement scheduled for Nov. 12.
On Thursday, DraftKings ended that strategy for FanDuel and the regulated industry overall.
Coming off a quarter where DraftKings missed earnings expectations and had to lower its year-end financial guidance, Robins wrote “this is the most bullish I have ever felt about the future of DraftKings.” He attributed the optimism in large part to the pending launch of DraftKings Predictions.
“We will pursue this opportunity, we will compete, and we will win,” Robins wrote.
