DraftKings is venturing beyond sports gambling and into prediction markets, planning to lay the groundwork for crypto-linked contracts as regulated event trading begins to flourish in the U.S.
As reported by Bloomberg, the company unveiled its DraftKings Predictions app on Friday, enabling users to speculate on various sports and financial outcomes. Initially, the app is accessible in 38 states, allowing sports-related trades in 17 of them.
According to Bloomberg, DraftKings aims to broaden its prediction market offerings to include contracts tied to cryptocurrency, entertainment, and cultural events.
The transition to prediction markets for DraftKings is supported by regulated derivatives infrastructure resembling that of CME Group, ensuring compliance with market standards.
The company mentioned that trades will take place through Railbird Exchange, a derivatives venue it purchased and that holds registration with the U.S. Commodity Futures Trading Commission (CFTC). This registration permits DraftKings to offer event-based contracts within a structured regulatory environment.
DraftKings’ growing national footprint. Source: Bloomberg
As a publicly traded entity, DraftKings elevates visibility and mainstream acceptance of prediction markets and potential crypto-linked contracts in the United States as the appetite for regulated event trading rises.
In early November, DraftKings reported a third-quarter revenue of $1.14 billion, a 4% increase compared to the previous year, alongside an adjusted loss of $127 million. The company anticipates generating up to $6.1 billion in revenue this year, approximately three times the amount earned in 2022.
Related: Polymarket demonstrates better user retention than most DeFi, wallets, and exchanges
From Polymarket to Wall Street: Prediction markets gain mainstream traction
DraftKings’ prediction market service does not utilize blockchain or decentralized technology, yet the broader prediction markets sector has seen significant growth, mostly due to crypto-native platforms revolutionizing market operations.
The most notable example is Polymarket, which transitioned prediction markets onto blockchain, allowing global engagement and rapid settlement.
This platform has increased the appeal of prediction markets among crypto users, especially during significant political events, particularly the 2024 U.S. presidential election. Its growth aligns with rising interest in various event-based trading platforms, such as Kalshi, a U.S.-regulated prediction market recognized by the CFTC.
Moreover, crypto-focused financial infrastructure providers are extending their services into this area. Bitnomial Clearinghouse, a derivatives clearing house under CFTC supervision, has indicated intentions to facilitate prediction markets related to cryptocurrency and economic factors.
Furthermore, crypto exchanges are expanding their offerings to include prediction-style services. Coinbase recently announced plans to incorporate stock trading and prediction markets in its aspiration of evolving into an “everything app.”
Source: Gemini
In addition, the Winklevoss-led Gemini cryptocurrency exchange has introduced prediction markets throughout the U.S. after acquiring the required regulatory clearances.
Related: Phantom collaborates with Kalshi to offer regulated prediction markets in its wallet
