CNBC host Jim Cramer believes the recent decline in DraftKings' stock could present a buying opportunity. He has stated that investor concerns about competition from online prediction markets such as Polymarket and Kalshi are exaggerated.
Key Takeaways
- Jim Cramer said fears about prediction markets hurting DraftKings are overstated
- Analysts believe prediction exchanges could eventually boost traditional sportsbooks
- Prediction markets face potential regulatory scrutiny that could limit their competitive edge
DraftKings shares have fallen more than 20% since early September despite strong second-quarter results in August, leading some analysts to question whether emerging prediction exchanges could disrupt the sports betting sector.
Cramer explained that prediction markets, while functioning more loosely under federal financial regulations than under state gambling statutes, have a limited scope and settlement compared to experienced sportsbooks.
He added that sites such as Kalshi and Polymarket have limited settlement options compared with DraftKings, yet many visit them, especially when entering a state without legalized sports wagering.
Analysts at Oppenheimer also suggested that these new markets might benefit traditional sportsbooks by introducing new customers to betting.
Cramer added that prediction markets face unresolved legal challenges, including state-level lawsuits, and could encounter stricter oversight as regulators review their status.
DraftKings considers entry into prediction markets
DraftKings CEO Jason Robins has acknowledged that the company continues to evaluate opportunities in prediction markets but is not yet ready to reveal details. At last month's Bank of America Gaming & Lodging Conference, Robins said the operator is watching how competitors like FanDuel, Underdog, and Polymarket approach the space.
FanDuel has partnered with CME Group, while Underdog teamed up with Crypto.com. Polymarket, initially targeted by regulators, now operates under the supervision of the Commodity Futures Trading Commission.
Robins said DraftKings is carefully assessing the regulatory and financial implications of entering the market. He noted that while federal authorities have signaled support, state-level acceptance remains inconsistent.
DraftKings would likely focus on jurisdictions without legalized sports betting to avoid market overlap. He also pointed out that many prediction markets involve contracts unrelated to sports, which could require additional compliance measures.
Bank of America analysts said the company's future moves could align with emerging exchange frameworks and expand DraftKings' presence beyond conventional betting.
Polymarket gains US regulatory approval through QCEX acquisition
While DraftKings explores its alternatives, Polymarket is setting up a regulated footprint within the U.S. The prediction markets firm closed a $112 million purchase of derivatives platform QCX and its clearing house arm QC Clearing, which operates under the collective name QCEX. This gives Polymarket a CFTC license to operate event-driven derivatives markets legally within the U.S.
QCX obtained its licensed contract market designation in July 2025 after a multi-year application saga. The purchase followed shortly after federal agents shuttered a probe into the company's earlier unregulated activities.
The platform gained worldwide attention when it was involved in the 2024 presidential election, and it is now set to return to the U.S. under federal supervision. Through the new license, Polymarket will grow its event-based trading solutions while being guided by tighter regulatory requirements.
