DraftKings has made a significant advancement in the realm of online gaming by unveiling a standalone predictions application. This strategic move marks the company”s official entry into federally regulated prediction markets, operating under the supervision of the U.S. Commodity Futures Trading Commission (CFTC).
The newly launched platform, named DraftKings Predictions, functions independently from the company”s established sportsbook operations. It enables qualified users to engage in trading event-based contracts that are directly related to actual outcomes in both sports and financial markets. The app is anticipated to be available on major app stores shortly, broadening its accessibility to users nationwide.
By maintaining a clear separation between its predictions app and traditional betting services, DraftKings intends to delineate regulated event trading from its core sportsbook activities. The company leverages its reputable brand and technological expertise to bolster this new product.
This launch comes on the heels of DraftKings settling a class-action lawsuit for $10 million, which alleged that its NFTs were unregistered securities. This move underscores the company”s commitment to compliance and regulation as it diversifies its offerings.
DraftKings executives have identified prediction markets as a vital strategy to attract customers in states where online sports betting remains illegal. During a recent earnings call, CEO Jason Robins indicated that this new avenue would not undermine the existing sportsbook business. Event contracts on the predictions app will be accessible in 38 states, including major markets like California and Texas, where legal approval for online sports betting is pending.
To facilitate trades, DraftKings will partner with the CME Group, a leading derivatives marketplace, with plans to enhance both liquidity and the variety of markets offered over time. Additionally, Polymarket will serve as the designated clearinghouse for the predictions platform, following DraftKings” acquisition of Railbird Technologies, a CFTC-regulated exchange operator.
The rising interest in prediction markets has been noteworthy in recent months, particularly as cryptocurrency platforms venture into sports-related contracts, tapping into increasing trading activity. Competitors like Kalshi and Polymarket have emerged as key players in this expanding sector. Recently, Kalshi reported a trading volume exceeding $5.8 billion in November, while Polymarket recorded approximately $1.8 billion.
As DraftKings Predictions launches under federal oversight, the company is set to attract new users, penetrate restricted states, and engage in a rapidly growing market segment.
