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DraftKings Bets on Prediction Markets with Acquisition of Railbird

BOSTON, MA – DraftKings is making a bold move to expand beyond its core sports betting business, acquiring prediction platform Railbird as it gears up to launch “DraftKings Predictions” in the coming months. The move signals DraftKings’ entry into the burgeoning world of event contracts, allowing users to trade on the outcomes of events in finance, culture, and entertainment.

Railbird, already licensed by the Commodity Futures Trading Commission (CFTC), caught DraftKings’ eye for its team and proprietary technology.

“We are excited about the additional opportunity that prediction markets could represent for our business,” said DraftKings CEO Jason Robins in a statement to CNBC. “We believe that Railbird’s team and platform—combined with DraftKings’ scale, trusted brand, and proven expertise in mobile-first products—positions us to win in this incremental space.”

Prediction markets allow users to trade on outcomes of events in finance, culture and entertainment. The company is making this move to expand beyond just sports betting.

The planned expansion isn’t without potential hurdles. Prediction markets, particularly those involving election outcomes and sports, have faced controversy. Dozens of states, gaming regulators, and tribes are already challenging companies offering trades based on sporting events, viewing them as a form of unlicensed gambling. Nevada has even warned that companies offering sports-related prediction markets risk losing their gambling licenses.

To navigate this complex landscape, DraftKings is expected to be strategic in its rollout of sports-related event contracts. The company may initially focus on states without legalized sports betting, such as California and Texas, to avoid conflicts with its existing sports betting operations. Technology could also be deployed to restrict access to sports-related trades on tribal lands.

DraftKings’ experience in the regulated gambling market could also lead to more stringent “know your customer” (KYC) measures within its prediction platform, aiming to prevent fraud and ensure compliance.

The acquisition of Railbird and the upcoming launch of DraftKings Predictions represent a significant diversification effort for the sports entertainment and gaming giant, marking a potential turning point in the evolution of prediction markets.

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