DraftKings to be disciplined in approach to prediction markets as football season approaches
If there was any skepticism over whether DraftKings is committed to predictions markets, that doubt was allayed during Friday’s second-quarter earnings call. All but a couple question from analysts during the call were pointed at DraftKings involvement in the controversial online exchanges.
And DraftKings CEO and Co-Founder Jason Robins was prepared to answer them, and confident of his company’s ongoing involvement in prediction markets.
“As the economics go, we’re looking at this in a way that is very similar to how we evolved in sportsbook,” Robins said. “We started off, we had an LTV (lifetime value) model that we built in the early days of sportsbook. We were pretty cautious because we didn’t have a lot of data. Here, we do have comparable data on the sportsbook side, which I think, particularly when it comes to customer acquisition, gives us a good sense of what to expect, but a little bit less so maybe in terms of modeling out what the ultimate monetization of these customers will be.
“I think we’ve been very careful and disciplined in how we’re doing that. We’re not assuming major increases that we don’t have line of sight to.”
DraftKings reported revenue of US$1.4 billion in the second quarter, a decrease of US$69 million, or 5%, year-over-year.
The underpinning of DraftKings strategy regarding prediction markets starts with have a full-product suite available to new customers.
“We want to offer as many customers as many products as we can, and in as many jurisdictions as we can around the country. …We have gone beyond DFS (daily fantasy) into other verticals like lottery, of course, and we now have, I think, the strongest footprint of anyone in the legal regulated betting space when it comes to our product portfolio,” Robins said. “That’s a huge advantage for us and something we’ll continue to press.”
Customer acquisition will continue to be important in prediction markets, and Robin said DraftKings will continue to be a data-driven company when it models ROI on any capital investments concerning acquisitions.
“We try to make the smartest capital investments we can to position the best returns for our shareholders over the long term,” Robins said. “So, this is really no different.
“I do think in this case, though, remember we have a huge national marketing footprint. Partners like ESPN, NBC, Amazon, several sports leagues, and others. We already have a lot of capital going towards those things. That is going to now basically just be more effective because it’s reaching the same customers that we were reaching before in the sportsbook states, but now it’s also reaching all these remaining states that have predictions. That itself is a huge advantage for us.”
DraftKings’ Commodities Future Trading Commission-regulated prediction‑markets exchange, DK Exchange, will be ready and phased in for the upcoming college football and NFL seasons.
Robins said, “we’re going to try to port as much of that volume over the exchange as fast as is reasonably possible.”
But it is of utmost importance that the customer experience is exemplary.
“To the extent that that means we have to move a little slower or a little faster on moving things onto our own exchange, we will,” Robins said. “The number one is making sure that the customer has the best experience because you can do things at a different pace in the background that maybe help the economics, but what you can’t do is you know repair a poor customer experience. That’s something we are holding as sacred.
“But I do expect that as we continue to move more and more volume through our own exchange, those unit economics will continue to improve for us and that should be a tailwind, not just through this year, but through next year as well.”
Dig Deeper
Related stories
2026/02/13: DraftKings intends to go full bore into prediction markets
2026/05/08: DraftKings signals intent to invest in prediction markets during earnings call
2025/11/07: DraftKings earnings call focuses on prediction markets and how new partnership with ESPN can be leveraged
2025/12/19: DraftKings launches prediction market without Railbird
2026/02/13: DraftKings intends to go full bore into prediction markets
2026/05/08: DraftKings signals intent to invest in prediction markets during earnings call
2025/11/07: DraftKings earnings call focuses on prediction markets and how new partnership with ESPN can be leveraged
2025/12/19: DraftKings launches prediction market without Railbird
The Backstory
From sportsbook expansion to event contracts
DraftKings’ push into prediction markets did not emerge as a side project. It is the latest step in a strategy the company has pursued since the fall of the federal sports betting ban in 2018: use its brand, trading infrastructure, media reach and customer database to enter adjacent regulated markets before rivals can establish a durable lead.
The current debate around DraftKings’ approach comes as football season concentrates attention on sports-related event contracts, a product that sits between financial exchange trading and sports wagering. For DraftKings, the timing is important. College football and the NFL drive customer acquisition, reactivation and trading volume across its core sportsbook business. If prediction markets can be offered in states without legal online sports betting, they give the company a way to reach customers in California, Texas and other large markets that have remained closed to mobile wagering.
That opportunity explains why Chief Executive Jason Robins has repeatedly described predictions as a potentially major growth category. In an earlier earnings call, he said the company saw prediction markets as the most significant new opening since PASPA was overturned, a view detailed in coverage of how DraftKings intended to go full bore into prediction markets. The thesis was straightforward: DraftKings already had pricing models, a trading desk, national marketing relationships and a sports-oriented customer base. Prediction markets could let the company apply those assets beyond the state-by-state sports betting map.
The Railbird deal supplied the regulatory rail
DraftKings’ most concrete move came with its acquisition of Railbird Technologies and Railbird Exchange, a federally licensed exchange designated by the Commodity Futures Trading Commission. The deal gave DraftKings a path into regulated event contracts and a platform around which it could build its own economics instead of relying indefinitely on outside partners.
At the time, the company framed Railbird as both a technology acquisition and a strategic foundation. The acquisition, covered in the report that DraftKings acquired Railbird Technologies, was designed to support a broader event-contract strategy across finance, culture, entertainment and potentially sports. DraftKings said the mobile product could connect to multiple exchanges, suggesting flexibility in how quickly it could scale and where it could offer different categories.
The logic was not only about access. Owning or controlling more of the exchange infrastructure could improve margins over time, an important point for a company whose sportsbook business has been shaped by promotional spending, tax rates and hold volatility. If DraftKings can shift meaningful activity onto its own exchange, it may reduce third-party costs and improve unit economics. That is why Robins has emphasized pacing: the company wants volume to migrate to its own rails, but not at the expense of customer experience.
The Railbird purchase also placed DraftKings more directly in the regulatory conversation. The CFTC has jurisdiction over derivatives and event contracts, while state gaming regulators oversee sports betting. Sports event contracts have exposed the tension between those frameworks. DraftKings’ strategy depends on the federal structure holding up sufficiently for a national or near-national product to operate, while avoiding a confrontation with states where the company has valuable sportsbook licenses.
Investment plans raised expectations
DraftKings’ ambitions became more explicit when Robins said the company expected to invest US$200 million to US$300 million in prediction markets during the year, including marketing, product and technology spending. That commitment, described in the report that DraftKings signaled intent to invest in prediction markets, showed investors the company was not treating event contracts as a modest product extension.
The proposed spending also highlighted the trade-off facing management. DraftKings’ core business has matured into a more profitable operation as customer cohorts age and promotional intensity eases in established sports betting states. Prediction markets reopen a growth phase that may require upfront capital, uncertain payback periods and regulatory risk. Robins has tried to address that tension by presenting the company as data-driven and willing to pull back if returns fall short.
The company’s early assessment has been that prediction-market users look similar to sportsbook customers, at least in sports-related activity. That matters because DraftKings can use existing customer-acquisition models to forecast lifetime value, even if monetization in event contracts remains less proven. Management has pointed to the ability to repurpose national advertising, including sports media partnerships, as a way to lower incremental acquisition costs.
There is also a political dimension. DraftKings has argued that prediction markets may pressure states to reconsider online sports betting and iGaming legislation. If residents can access sports-linked event contracts under federal oversight, state lawmakers may have less incentive to preserve prohibitions that leave tax revenue and consumer protection outside their systems. That argument has not settled the debate, but it has changed the leverage in states that have resisted legalization.
ESPN deal amplified the distribution case
DraftKings’ media strategy became more central after it announced a partnership making the company ESPN’s sole official sportsbook and odds provider. Although that agreement was not limited to prediction markets, investors quickly focused on how ESPN’s reach could support DraftKings Predictions. The earnings call that followed, covered in the article on how DraftKings’ earnings call focused on prediction markets and ESPN leverage, underscored the connection between distribution and product expansion.
ESPN gives DraftKings access to a massive sports audience, fantasy sports users and a digital ecosystem where odds, game data and interactive products can be integrated. For prediction markets, that could be especially valuable in states where DraftKings cannot offer a sportsbook. A consumer in a non-betting state may still encounter DraftKings through ESPN content, then be directed toward a federally regulated event-contract product if available.
Robins has said the company expects to focus on states without DraftKings sportsbooks because that is where the largest incremental opportunity exists. That distinction is central to the company’s regulatory posture. In states where DraftKings already offers legal sports betting, the company has less need to push sports prediction products that might antagonize regulators or cannibalize the sportsbook. In states without online sports betting, event contracts could serve as a substitute product and a customer funnel.
The ESPN agreement also raises competitive stakes. Prediction-market startups may have regulatory speed or a narrow product focus, but DraftKings has brand recognition, sports betting experience and media inventory. If event contracts become mainstream, distribution could determine which operators acquire liquidity and customers fastest. That is why DraftKings has described its position as stronger than it was during the early sportsbook land grab.
A cautious rollout followed industry friction
DraftKings’ launch plans have already shown the complexity of turning the strategy into a live product. The company formally announced DraftKings Predictions in 38 states and Washington, D.C., but did so initially through CME Group rather than Railbird. The launch, outlined in coverage of how DraftKings launched a prediction market without Railbird, suggested the company was willing to use multiple routes while its acquired exchange infrastructure developed.
The rollout was uneven by design. DraftKings offered sports event contracts in some states while limiting other jurisdictions to nonsports markets. It also excluded several states, including some with established sports betting regimes. That reflects the unsettled regulatory environment and the company’s need to protect relationships with state regulators, many of whom are skeptical of federally regulated sports event contracts that resemble wagering but do not follow state gaming tax and licensing systems.
The company’s split with the American Gaming Association further illustrated the divide. DraftKings and FanDuel left the trade group as they moved toward prediction markets, while the AGA continued to argue that the products lacked the same state-level safeguards, responsible gambling rules and tax obligations as legal sportsbooks. DraftKings has countered by emphasizing CFTC oversight and extending responsible-gambling-style tools into what it calls responsible trading.
That friction is unlikely to fade quickly. State regulators worry about market substitution and consumer protection. Tribes and commercial casino operators may view prediction markets as a way for national platforms to bypass negotiated gaming compacts and state legislation. Meanwhile, DraftKings sees a large untapped market and a chance to use federal event-contract rules to expand its addressable audience.
The stakes heading into football season
The football calendar is the first major test of whether DraftKings can balance speed, compliance and product quality. Football delivers the highest-volume period for U.S. sports betting, and it could do the same for sports event contracts if customers understand the product and find the experience comparable enough to wagering.
DraftKings’ challenge is to move quickly without undermining the customer experience or provoking regulatory setbacks. Robins has said poor user experience is difficult to repair, a notable caution from a company otherwise signaling urgency. That discipline reflects the stakes: prediction markets could become a new national growth engine, but a misstep could damage regulator trust in states that remain central to DraftKings’ sportsbook and iGaming ambitions.
The broader causality is clear. Limited sports betting legalization created white space. Federal event-contract oversight created a possible path into that space. Railbird gave DraftKings infrastructure. ESPN and other media relationships provide distribution. Football season supplies demand. The unanswered question is whether the legal and political environment will allow the model to scale before states, courts or federal regulators narrow the opening.
For now, DraftKings is positioning prediction markets as both an offensive growth strategy and a defensive necessity. If the category expands, the company wants to lead it. If it pressures states to legalize sports betting or iGaming, DraftKings also benefits. Either way, prediction markets have moved from a speculative adjacency to a central part of the company’s growth narrative.
