DraftKings Plans Expansion Into Prediction Markets Amid Regulatory Resistance

DraftKings is making a significant move into the prediction market business with its acquisition of Railbird Technologies, a federally licensed exchange regulated by the Commodity Futures Trading Commission (CFTC). The company plans to launch a new app, DraftKings Predictions, which will allow users to trade contracts on a variety of topics including finance, culture, and entertainment, deliberately excluding sports to avoid regulatory conflicts. This expansion follows similar efforts by FanDuel, which partnered with the CME Group to develop its own prediction market platform. Despite regulatory warnings in several states cautioning that offering prediction markets could jeopardize sports betting licenses, DraftKings and FanDuel are actively engaging with regulators to navigate these challenges, particularly aiming to operate in states without legalized sports betting like California and Texas. The NHL's partnership with prediction market operators Kalshi and Polymarket signals a shift in major sports leagues' acceptance of prediction markets, contrasting with previous concerns expressed by the NBA and MLB. Moreover, DraftKings' collaboration with Polymarket as a clearinghouse illustrates a blending of traditional finance, sports betting, and emerging Web3 technologies in the prediction market space.