By Nick Devor
DraftKings' prediction markets went live on Friday, bringing sports event contracts to 17 states that haven't legalized sports betting, including California, Texas, and Florida.
The app, DraftKings Predictions, is a stand-alone product from the company's signature sportsbook and available in 38 states. Twenty-one of those don't have access to sports event contracts, but all customers can trade event contracts based on stock market levels and economic events, like the Federal Reserve's next interest-rate decision. Contracts related to culture and entertainment will come later, according to a Friday press release.
"DraftKings Predictions is a significant milestone and reflects our ongoing commitment to delivering products that tap into the passion of our customers," DraftKings chief product officer Corey Gottlieb said in the release.
DraftKings shares opened up 1.6% on Friday, before retreating to around a 0.5% gain by the afternoon.
Prediction markets have been a major headwind this year for the U.S. sportsbook duopoly of DraftKings and FanDuel-parent Flutter Entertainment. Shares of each year to date are down 7.5% and 13.7%%, respectively.
Event contracts allow traders to take a position on yes/no questions such as "Will the Rams win the Super Bowl?" While sports event contracts effectively replicate sports wagering, they are technically financial instruments regulated by the Commodity Futures Trading Commission and therefore legal nationwide. The contracts aren't subject to the state-by-state regulatory structure of traditional sports betting, which is how DraftKings can bring DraftKings Predictions to states where voters have turned down proposals to legalize sports betting, as in California.
DraftKings Predictions doesn't look like typical prediction markets like Kalshi or Polymarket, which highlight the yes/no percentage chances of a particular event; DraftKings' offering uses a sportsbook odds format and resembles its sports wagering app. (The odds that the Rams win the next Super Bowl are shown as +426, for example.)
Beyond refilling the moat that sports event contracts have eaten away at over the year, there are multiple reasons for DraftKings to have its own prediction market.
Jordan Bender, a senior equity analyst at Citizens covering the gambling industry, believes that prediction markets will be an effective catalyst to prompt legalization of sports betting in states that haven't yet. Sports betting through prediction markets "basically gives the industry ammo to go to these states and say 'Look at all the tax revenue you're not capturing. Let's come up with a legal framework,'" he says.
On his company's latest earnings call, DraftKings CEO Jason Robins said it was a "no-brainer to focus on the states that don't have online sports betting already."
In addition to the pressure prediction markets put on state legislatures, they're an easy way for DraftKings to onboard new customers, Bender says. The company spends more than a billion dollars a year on marketing efforts in states that have already legalized sports betting, needing to dig deeper to acquire more customers. Potential DraftKings customers who want to bet on sports but live in states without legal sports betting can now sign up for DraftKings Predictions and bet via event contracts.
Should states where DraftKings Predictions is operating legalize sports betting, the company will already have a suite of customers to transfer over to its sportsbook. "You're building the database, you're offering more products, and you're opening the consumer's wallet all in one swoop, " Bender says.
FanDuel has its own plans to launch a prediction market, and will follow a similar strategy. "As new states legalize online sports betting, FanDuel will cease offering sports event contracts in those states," the company said in a press release announcing its prediction market, FanDuel Predicts.
Write to Nick Devor at nicholas.devor@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 19, 2025 13:44 ET (18:44 GMT)
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