DraftKings Launches 'DraftKings Predictions' in 38 States

DraftKings has released its standalone prediction markets app on Friday, expanding its footprint beyond traditional sports betting and into federally regulated event contracts.

The new product, DraftKings Predictions, allows users in 38 states to trade contracts tied to sports outcomes and select financial events, positioning the company within a fast-growing sector that sits between derivatives trading and gambling.

The app operates in conjunction with DraftKings' existing sportsbook offerings, rather than replacing them. The company said the initial launch focused narrowly on sports and financial markets, with plans to introduce additional categories such as entertainment, culture, and cryptocurrency-based events at a later stage. 

DraftKings also noted that it will take a gradual approach, reflecting the regulatory disagreement over prediction market apps, as state gaming regulators and federal authorities continually dispute over whose jurisdiction they fall under. 

The operator chose to roll out the product in just a few states to avoid conflicts with existing sportsbook licenses. Sports-related contracts were provided for consumers in large markets where sports betting is currently illegal, such as California, Texas, and Georgia.

Prediction markets fall under the oversight of the Commodity Futures Trading Commission (CFTC), which regulates derivatives and futures exchanges. Some state gaming authorities had warned licensed sportsbooks that offering prediction contracts could jeopardize their operating approvals. 

“These products are federally regulated, so theoretically we could offer them in all 50 states,” said Jeanine Hightower-Sellitto, senior vice president and general manager for prediction markets at DraftKings, “But we’re very mindful of our regulators and the relationships that we carry with those state regulators.”

Initially, customer trades will be routed through a regulated exchange launched by CME Group Inc., a major derivatives operator that has also maintained a commercial relationship with FanDuel. DraftKings has likewise strengthened its position in the space through a separate October acquisition of Railbird Technologies Inc., a CFTC-registered exchange. 

The company said it plans to migrate trading activity to Railbird in the coming months.

DraftKings, FanDuel exit AGA

DraftKings' move into prediction markets coincided with a broader strategic realignment across the US sports betting industry. Last month, both DraftKings and FanDuel withdrew from the American Gaming Association (AGA), signaling a departure from the industry's primary trade group as each operator accelerated its push into federally regulated event contracts.

The exits were confirmed after disclosures in both companies' third-quarter earnings reports identified prediction markets as a core growth priority. That position placed them at odds with the AGA, which had consistently argued that sports-related prediction markets should be treated as gambling products and subject to the same licensing standards as sportsbooks. 

The association confirmed that it had accepted both companies' requests to end membership immediately, while stating that it expected to continue collaborating with them on select issues.

Despite unresolved legal questions, DraftKings and FanDuel opted to enter the market rather than wait for judicial or legislative clarity. Both companies cited shifting consumer behavior and competitive pressure as factors in that decision.