DraftKings just made a bold move beyond sports betting, acquiring CFTC-licensed predictions platform Railbird to launch DraftKings Predictions in the coming months. The acquisition signals the gambling giant's push into prediction markets - a controversial space where customers can trade on everything from election outcomes to cultural events, potentially opening new revenue streams while navigating complex regulatory waters.
DraftKings is making its biggest strategic pivot since going public, acquiring predictions platform Railbird to launch what could become its next major revenue driver. The sports betting giant announced it's preparing to roll out DraftKings Predictions in the coming months, marking a significant expansion beyond its core gambling business.
The deal centers on Railbird's golden ticket - a Commodity Futures Trading Commission license to operate an event contracts exchange. That regulatory approval gives DraftKings immediate entry into prediction markets, where users can essentially bet on anything from presidential elections to Oscar winners to Federal Reserve interest rate decisions.
"We're excited about the additional opportunity that prediction markets could represent for our business," DraftKings CEO Jason Robins told CNBC. "We believe that Railbird's team and platform - combined with DraftKings' scale, trusted brand, and proven expertise in mobile-first products - positions us to win in this incremental space."
The timing couldn't be more strategic. Prediction markets have exploded in popularity, especially around major events like elections, but the space remains fragmented and heavily regulated. DraftKings brings something most prediction platforms lack - a proven track record of navigating complex state-by-state gambling regulations and the technical infrastructure to handle massive trading volumes.
But there's a catch that could significantly limit DraftKings' ambitions. The company's bread-and-butter sports betting licenses are under threat if it offers sports-based prediction markets. Dozens of states, gaming regulators, and tribal authorities are actively suing or taking regulatory action to block companies from offering trades on sporting events, viewing them as unlicensed gambling that circumvents their carefully crafted sports betting frameworks.
Nevada has been particularly aggressive, warning that companies risk losing their valuable gambling licenses entirely if they venture into sports prediction markets. For DraftKings, which generates the majority of its revenue from sports betting, that's an existential threat.
The company's likely workaround reveals the complexity of this regulatory maze. Industry sources suggest DraftKings will probably focus DraftKings Predictions on states that don't offer licensed sports betting - massive markets like California and Texas where the company has limited presence. The platform can also use geofencing technology to block sports trades on tribal lands, where different regulatory frameworks apply.
