DraftKings will launch a sports prediction market in the coming months, company officials reaffirmed Friday, despite potentially risking their standing with gaming regulators in more than two-dozen jurisdictions.
- DraftKings will move ahead with its prediction market platform despite warnings from state regulators that such offerings could threaten its sportsbook licenses.
- The company believes the potential market upside outweighs regulatory risks, arguing prediction markets represent a “significant incremental opportunity.”
- Rival FanDuel now faces pressure to respond as DraftKings’ launch may reshape the legal and competitive landscape for sports-based event contracts.
The company announced DraftKings Predictions Thursday following weeks of speculation after acquiring licensed prediction market platform Railbird. CEO Jason Robins said during DraftKings’ Friday earnings call that he had undertaken “numerous conversations” with regulators and policymakers about the Railbird deal and the company’s intentions.
“I think through the strength of those relationships and conversations, we got comfort in the approach that we’re taking,” Robins said.
Prediction market background
Prediction markets, which allow users to buy and sell event contracts on government actions, pop culture, and a wide range of other future developments, burst onto the American consciousness during the 2024 U.S. presidential election. That exposure grew following the launch of sports event contracts in the 2025 Super Bowl, with sports generating significantly more exchange volume than all non-sporting events combined.
Sports event contracts allow users to trade on the outcome of sporting events in a manner that resembles a traditional sportsbook. Prediction markets are regulated by federal law, a status they have fought to maintain in a growing number of court cases.
As major operators grew in prominence, so too did the ire of state regulators that are now arguing in court against the legality of prediction markets within their borders. Multiple states have warned their sportsbook licensees they could suffer consequences if they launched prediction markets.
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— Steve Ruddock (@SteveRuddock) November 7, 2025
Fearing regulatory action from these state gaming agencies, the major U.S. licensed sportsbook operators dismissed launching prediction markets of their own. Major companies also downplayed the revenue potential, saying that prediction markets and their more limited sports offerings didn’t threaten a sportsbook industry bottom line increasingly driven by exotic, multi-leg parlay bets the markets couldn’t offer.
DraftKings changed that approach Thursday.
One of the two major U.S. sportsbooks by market share, DraftKings upended the industry’s wait-and-see approach by announcing a prediction market. The move says the company views the risk of regulatory scrutiny as less than the potential market lost by Kalshi, Polymarket, and other major existing prediction market operators.
“There are numerous data points from around the globe that validate that predictions in sports is relatively small and largely incremental relative to traditional sports betting,” Robins said Thursday. “In actuality, we see predictions as a significant incremental opportunity.”
First mover reward, risk
Unlike Kalshi and Polymarket, DraftKings faces significant risk from a prediction market launch.
Regulatory authorization in many states gives officials wide leeway to fine, restrict, or otherwise strip a license holder of its ability to offer bets in their state. Most state regulations also permit these bodies to punish licensees in their state if they are found in violation of rules in another.
Sports accounted for most of DraftKings’ $4.8 billion in 2024 revenue.
Robins said conversations with regulators and policymakers justified the move. He said for both compliance and business reasons DraftKings Predictions would only launch in some of the roughly two-dozen states the company doesn’t offer its sportsbook.
In the meantime, prediction markets’ legal status under federal law won’t be settled for years, likely until a case reaches the Supreme Court. A launch in the meantime comes with risks, especially if the courts rule against the prediction markets.
DraftKings has also forced that decision onto rival FanDuel, the other major sports betting market share leader. FanDuel’s prediction market choice will determine whether DraftKings will deal with a powerful competitor or will be left to fight by itself in what will be a prolonged and costly set of legal battles.
FanDuel parent company Flutter Entertainment partnered with commodities-focused prediction market platform CME Group this year but has not announced sports event contract plans. Flutter now will have to answer the question about its event contract plans during its earnings call next week.
In either scenario, it’s clear DraftKings viewed the price of inaction as more costly than launching a product that could threaten the core of its multibillion-dollar sports betting business.
