DraftKings CEO Downplays Prediction Market Threat

DraftKings is confident that prediction markets won't be a problem for sportsbooks. CEO Jason Robins said he does not believe prediction markets will attract customers away from the best sports betting sites in states where both products are legal. 

Speaking at the Global Gaming Expo (G2E) keynote, Inside the C-Suite: Gaming's Future in Focus on Stage, Robins said that while prediction markets such as Kalshi and Polymarket could gain traction in states without legal sports betting, their products are not comparable to sportsbooks in markets where betting is already regulated.

Robins told the Las Vegas audience that prediction markets may offer some appeal in large, unregulated states such as California and Texas, but added that the sportsbook experience remains significantly superior in terms of functionality and user engagement. He emphasized that liquidity challenges and the absence of complex bet types, such as parlays, would limit the competitiveness of prediction markets.

He also noted that exchanges differ in how they handle customer activity, pointing out that the best sports betting apps manage bettor limits and risk in ways that prediction markets do not. However, he declined to comment on whether he believed sports event contracts should be regulated by the state or banned.

Flutter Entertainment CEO Peter Jackson, whose company is the parent of FanDuel, shared a similar outlook, referencing the limited market share of Betfair Exchange in the UK. Jackson said that while prediction markets have potential, they face difficulties replicating sportsbook features such as promotions, parlays, and liquidity depth.

Kalshi launches custom parlays

Despite DraftKings’ CEO seeing no threat from prediction markets, the sportsbook, as well as Flutter, have experienced mixed investor sentiment following the rollout of tailored parlay options on the prediction market app Kalshi. 

At the end of September, the shares of both companies dropped by more than 10% after Kalshi unveiled the product, which allows bettors to combine multiple outcomes in a single wager. DraftKings closed at $37.40, down 11.59%, while Flutter fell 10.33% to $254.01.

Other gambling-linked firms also declined. Genius Sports fell 7.86% to $12.38, and Sportradar Group dropped 5.81% to $26.90. Casino operators with diversified portfolios fared better, with Caesars Entertainment down 3.03% and MGM Resorts International falling 5.12%.

Kalshi's user-specific parlays have also raised eyebrows among sportsbook operators, as parlays are one of the highest margin revenue generators.

Despite Kalshi's odds being the same as, or worse than, those of the sportsbooks, factors could prompt DraftKings and FanDuel to make price adjustments. It follows a tough start to the NFL season for sportsbooks, which typically perform their best under conditions of uncertain game results.

Kalshi has not disclosed how it provides liquidity for its parlay products, and on launch day, users were unable to place limit orders.