DraftKings Prediction Market App Will Focus on States Without Legal Sports Betting

DraftKings has acquired prediction market company Railbird for an undisclosed amount ahead of launching its DraftKings Predictions mobile app. The deal had been rumored for months.

The news arrives as total weekly prediction market volume soared above $2 billion for the first time last week as interest in the platforms surges. An oft-cited Certuity report estimates that prediction markets could reach $95.5 billion by 2035, with a compound annual growth rate of 46.8%.

Railbird has held a designated contract market license since June, according to the Commodities Futures Trading Commission. The license allows it to self-certify and offer event contracts. DraftKings said in a press release that its new app will give users access to “finance, culture, and entertainment” contracts, the company said in a press release.

There have been lots of deals and surging interest in the prediction market industry this year.

In July, current prediction market volume frontrunner Polymarket acquired CFTC-licensed derivatives exchange QCX for $112 million. The company began self-certifying its own event contracts at the start of the month.

Meanwhile, Kalshi, another early player, has been engaged in legal battles with multiple states and Native American tribes over jurisdiction. Kalshi and other prediction markets have been operating on the premise that because they are regulated by the CFTC, they do not need individual licenses from the states in which they operate.

Paul Zilm, a sports betting operations expert and full-time trader at prediction market firm Mojo, said he’s interested to see how the news of the DraftKings acquisition lands with state betting regulators.

As of August, DraftKings had just acquired its 29th sports betting license in Missouri.

“Some states they already operate in have been vocal that launching prediction markets in their states may jeopardize their regulated gambling license,” he said on LinkedIn.

A person familiar with DraftKings’s plans told Decrypt its new prediction market app will focus on states without legal sports betting.

DraftKings added that its new prediction market app will also have the ability to connect to multiple exchanges, and that its offerings will expand into additional categories—which leaves the door open for it to offer sports event contracts.

“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,” DraftKings CEO and co-founder Jason Robins said in a press release shared with Decrypt.

“This is a transformational moment for our company, and we are thrilled to be a part of the future of DraftKings,” Miles Saffran, CEO and co-founder of Railbird, said in the press release. “DraftKings’ scale and leadership in the industry creates meaningful opportunities for our team and platform.”

The deal was announced after stock markets closed Tuesday, when DraftKings, which trades under the DKNG ticker on the Nasdaq, marked a 0.06% gain and was changing hands for $33.62. Early Wednesday, DKNG was trading for $34.60 after gaining 3.21% in pre-market trading.