DraftKings has gone from tiptoeing toward prediction markets to diving headfirst into the exchange wagering business.
“When a new growth lane opens, we move fast and execute at scale,” DraftKings CEO Jason Robins wrote in a letter to shareholders. “Predictions is the most exciting new growth opportunity we have seen since PASPA was struck down in 2018.”
- DraftKings is aggressively expanding into prediction markets, calling them an exciting growth opportunity and targeting hundreds of millions in annual revenue.
- CEO Jason Robins said the company sees billions in annual gross revenue opportunity and plans to invest heavily in customer acquisition, exchange operations, and market-making.
- Despite regulatory scrutiny and legal pushback, DraftKings believes prediction markets will unlock new revenue streams, including in states without legalized sports betting, while having minimal impact on its existing sportsbook business.
The letter was among the disclosures made by the Boston-based online gambling company in announcing its latest financial results.
In addition to the company’s fourth-quarter numbers, there was plenty of commentary about its plans to invest and expand the prediction markets business it launched only in December.
Robins said in his letter that the company plans “to deploy growth capital to build the best customer experience in Predictions and acquire millions of customers.”
“We are targeting hundreds of millions in annual revenue for DraftKings Predictions in the years ahead, and we believe there is much more upside over the long-term,” Robins wrote. “This should translate to meaningful incremental Adjusted EBITDA. In Predictions, we have the playbook to execute and win.”
The prize in prediction markets could be significant, according to DraftKings.
“Based on analyst estimates, Predictions could represent a $10-billion annual gross revenue opportunity in the years ahead,” Robins wrote. “We expect to capture it across multiple business lines, including the customer-facing platform, our own exchange, and market-making.”
DraftKings CEO Jason Robins wrote in his latest shareholder letter that "Predictions is the most exciting new growth opportunity we have seen since PASPA was struck down in 2018." pic.twitter.com/3RgIO2MA6E
— Geoff Zochodne (@GeoffZochodne) February 12, 2026
The comments from the CEO of one of the biggest providers of online sports betting in the U.S. suggest DraftKings is planning to plow significant resources into the still-young business of prediction markets. They also present the possibility of DraftKings running into pushback from lawmakers, state regulators, and Native American gaming tribes as it pursues these opportunities.
Among other things, Robins' mention of PASPA, the Professional and Amateur Sports Protection Act, highlights how big of an opportunity his company sees. The striking down of PASPA in 2018 paved the way for more states to legalize sports betting, and DraftKings and others have since been huge beneficiaries of state-by-state regulation.
Even so, PASPA's downfall didn't lead to every state legalizing sports betting. Moreover, prediction markets are still facing legal and regulatory pushback across the U.S. from gambling regulators who say the sports event contracts offered by the federally regulated exchanges are too much like straight-up sports wagering.
Shoot your shot
While DraftKings is overseen by many state regulators, and at first took a wait-and-see approach to prediction markets, it still moved into the exchange business and is now poised to move even harder and faster.
That is likely due in no small part to prediction markets being able to offer a de facto form of sports wagering in states that have yet to legalize sports betting, namely California and Texas.
Meanwhile, DraftKings has taken care not to upset gambling regulators in states where it holds sports betting licenses. For example, DraftKings Predictions is not offering sports event contracts in states where it offers its online sportsbook.
Additionally, the Commodity Futures Trading Commission (CFTC), which oversees prediction markets, has declined to rein in the exchanges. In his letter, Robins even endorsed the new CFTC chair's move to craft new standards for event contracts.
DraftKings reported an unadjusted profit of $136.4 million for the fourth quarter of 2025, albeit a $3.7 million profit for 2025 overall. pic.twitter.com/a2vpZYKohp
— Geoff Zochodne (@GeoffZochodne) February 12, 2026
DraftKings also sounds confident it can carve out significant market share for itself in prediction markets.
The company has plans to improve its product and expand how it makes money from trading. It is still integrating the CFTC-regulated Railbird Exchange into its platform as well.
“We are also launching market-making because liquidity is a core part of the customer experience in Predictions,” Robins wrote. “Contract listings, fees, market structure, and distribution matter, but tight two-way markets with depth are what attract participants. Exchanges seed liquidity by incentivizing market-makers, and DraftKings can lead market-making for sports contracts because we model sports probabilities exceptionally well and have the infrastructure to provide liquidity across a broad spectrum of contracts.”
Therefore, Robins wrote, there could be two “revenue engines” for DraftKings: transaction fees and money made from market-making and proprietary trading, including “where it makes sense, on other exchanges.”
Robins also said in the letter that the company is not seeing "a discernible impact" from prediction markets on DraftKings' revenue, including its large, state-regulated online sports betting business. Sportsbook handle in the fourth quarter grew by 13% year-over-year, he noted.
“Internal and third-party data suggest Predictions impacted our January handle only very slightly and primarily impacted low-margin customers,” the CEO said. “Consequently, the impact to our revenue has been de minimis.”
