DraftKings Acquires Railbird Exchange, Clearing Way for Prediction Markets

DraftKings is officially set to enter the emerging prediction market industry.

After months of negotiations, DraftKings has officially acquired newly-licensed prediction market operator, the Railbird Exchange. The sports betting and DFS giant has been looking for a way to expand into the prediction market space, along with rival FanDuel. 

Railbird Exchange was licensed by the Commodity Futures Trading Commission (CFTC), paving the way for the launch of its platform. DraftKings initiated negotiations soon after, though the details from those talks remain unknown.

The press release announcing the deal confirmed that DraftKings will first launch non-sports markets, but didn’t rule out their availability in the future.

“The Company also confirmed plans to launch DraftKings Predictions, a forthcoming mobile application that will allow customers to trade regulated event contracts on real-world outcomes across finance, culture, and entertainment,” the press release reads. “The product will have the flexibility to connect to multiple exchanges, enabling DraftKings to offer one of the broadest suites of markets to its customers. Its offering may expand into additional categories over time, deepening customer engagement and extending DraftKings’ addressable audience.

No timetable has been provided for the launch of DraftKings Predictions, though the company confirmed it plans to launch in the “coming months.”

FanDuel, DraftKings Assessing Risks of Sports Markets

While FanDuel and DraftKings have both stopped short of offering sports prediction markets, rumors suggest that it won’t last long.

Both operators have been assessing the threat posed by warnings from states. Regulators in Arizona, Nevada, and Ohio have all notified sportsbook and DFS operators that their state licenses would be reviewed if they offer sports prediction markets. 

FanDuel and DraftKings are leaders in both industries, but that could change if regulators follow through with their threats. That would slash revenue from both industries and threaten their stranglehold over the US sports betting market.

Sports prediction markets would likely help replace that lost revenue, but that isn’t a guarantee. Operators like Kalshi have more experience and a large customer base, meaning they have a significant head start on DraftKings and FanDuel. There is also a litany of lawsuits challenging the industry’s legality, which means its future is far from a guarantee.