A month after cutting ties with the American Gaming Association, DraftKings formally announced the launch of its prediction-market products. The December 19 disclosure affects 38 states and the District of Columbia, including non-sports betting states California, Georgia, and Texas.
DraftKings incepted event contracts without going through Railbird, the prediction-market firm it purchased for a reputed $250 million in October. Rather, DraftKings Predictions will be launched in tandem with CME Group.
Asked by Sportico if Railbird wasn’t yet ready to handle DraftKings products, Chief Product Officer Corey Gottlied replied, “Sort of.” According to DraftKings’s official statement, a “planned rollout” of Railbird Technologies and subsidiary Railbird Exchange will follow, enabling access to still more states that will “deliver advantaged economics over time.
“DraftKings Predictions is a significant milestone and reflects our ongoing commitment to delivering products that tap into the passion of our customers,” said Gottlieb, in a prepared statement. “We will create an unparalleled customer experience, leveraging key strategic relationships like ESPN and NBCUniversal to provide an authentic, real-time product that moves at the speed of sports. … We believe we are uniquely positioned to lead this space over the long term.”
In Washington, D.C. and 21 other states, DraftKings will deploy an attenuated portfolio of exchanges that do not include sports. Full sports wagering via event contracts will take place in 17 states.
As part of its announcement, DraftKings promised the ability to trade on “a wide range of markets, with sports and finance available initially and additional categories such as entertainment and culture expected as the offering expands.” Despite concerns by state-level regulators, DraftKings invoked the oversight of the Commodity Futures Trading Commission as evidence that its product will be properly regulated.
DraftKings said that it would be extending its responsible-gambling programs into the prediction-market sphere, through a Responsible Trading outreach. This would, the company said, stress “education, awareness, and informed participation, helping customers understand how event contracts work and manage their trading activity responsibly. Customers can set deposit limits, take cool-offs or self-exclude, and access educational materials.”
DraftKings also announced a $1 million launch promotion, as well as $25 conditional bonuses for initial trades. Funds deposited in sports book accounts cannot be transferred to the new platform, however. Parlay trades will also not be initially available.
The event-contract rollout comes on the heels of DraftKings’s resignation from the American Gaming Association. FanDuel also quit the trade group, in order to enter the prediction market.
According to InGame reporting, a cocktail-hour meeting of the AGA ended in a rupture “and the end result was a clear split between the AGA, DraftKings, and FanDuel about prediction markets.” Said DraftKings at the time, “As the company’s business strategy evolves — including with prediction markets — DraftKings determined that its plans no longer fully align with the AGA’s direction in certain areas and [it] has decided to relinquish its membership.”
An AGA representative told InGame, “We wish them the best and we expect to maintain close ties in our mission to promote and protect legal regulated gaming.” Both DraftKings and FanDuel are keeping their memberships in the Sports Betting Alliance.
“The AGA has been lobbying against prediction markets, arguing that they are not beholden to the same sorts of regulation as state-regulated sportsbooks, including a lack of responsible gambling guideline,” reported InGame’s Jill Dorson. “Prediction markets also do not pay state taxes.”
In conversation with Sportico, Gottlieb said unlike Kalshi or other rivals, DraftKings would eschew bet-laden terms like “parlay” to promote its new products. He added, “These products on the prediction side are very nascent and very thin where content and experience are concerned, whereas a sports book is so deep and robust in its offering. And I think for an extended period of time, if not forever, that’s going to be the case.”
DraftKings Predictions will be blacked out in Washington, Montana, Arizona, Nevada, Iowa, Illinois, Arkansas, Tennessee, Ohio, Pennsylvania, New Hampshire, and Maine. Gottlieb told Axios that this was pursuant to discussions with state regulators and “A lot of it is rooted in the fluidity of states and regulators forming their perspective on the space.”
