DraftKings Launches Prediction Markets in 38 States

DraftKings Launches Prediction Market App

DraftKings, one of the most prominent sports betting operators, has announced its move to launch a prediction market app across 38 states, matching the number where it legally operates sportsbooks. This new venture will allow them to offer sports event contracts in 17 states in particular.

Prediction markets are not solely focused on sports. Initially, these markets dealt with various topics, including event outcomes outside the realm of sports. This broad scope allows companies like DraftKings to operate in states such as California and Texas, where sports betting is still not legal. For its part, DraftKings will begin by offering spreads, alternate spreads, and traditional game winner money line betting options focused on major leagues like the NBA, NFL, college basketball, and the NHL.

Competitors like Calhi and Polymarket have already expanded into other sports, including boxing. Sources suggest that successful implementation of DraftKings' new app could lead to an expansion in both the range of sports covered and the betting options available.

The introduction of sports prediction markets comes as some states, including Arizona, have threatened to revoke sports betting licenses from firms like DraftKings and FanDuel if they provide such markets. This development follows an incident where Underdog lost its fantasy license in Arizona for offering sports event contracts. Despite these regulatory challenges, industry observers note that the prediction market, which closely resembles sports betting but remains distinct, seems poised to persist amidst ongoing legal scrutiny.

The Commodities Futures Trading Commission (CFTC), alleged by many firms to be the regulatory body overseeing these markets, has yet to take significant action, indicating that interference in the near future is unlikely. This regulatory ambiguity provides an environment where sports betting companies see an opportunity to cater to jurisdictions like California and Texas by providing services akin to sportsbooks but without the stringent regulations typically associated with them.

As DraftKings and similar companies navigate this evolving landscape, the industry is closely watching how these developments could reshape sports betting across the United States over the coming year.