DraftKings has a track record for seizing opportunities as soon as they present themselves. Despite its criticism against Robinhood and Kalshi, two platforms that began offering future-event markets for sports contests and amped up their offer in time for March Madness, DraftKings sought to become a member of a regulatory trade group focused on prediction markets and derivatives. An application may have been pending with the trade group since June 30, 2024.
DraftKings Predict cancels application for prediction markets trade body
The move suggested that DraftKings realized prediction markets could prove to be a more worthwhile pursuit when it comes to sports betting or, at the very least, another medium of engagement with sports fans.
Although not officially sports betting platforms, prediction markets and platforms have made it big with fans of sports, leading to stronger engagement and allowing the public to bet against each other and set the odds this way, rather than wait on traditional odds-fixers such as DraftKings, FanDuel, BetMGM and others to tell them what the odds are.
While the prediction market frenzy seems to still be unfolding in earnest, the DraftKings Predict platform, which was the name of the applicant to the National Futures Association (NFA), a self-regulatory organization that represents the derivatives industry in the United States, has been withdrawn, as reported by Bloomberg.
The withdrawal from the NFA, however, does not necessarily mean that DraftKings has abandoned its plans to participate in the sector and the idea of introducing its own prediction market. Much like daily fantasy sports prior to the legalization of sports betting, prediction markets could be launched across the entirety of the country, as they are not illegal.
Prediction markets still face a murky regulatory landscape
Despite widespread pushback from multiple states, and specifically their gambling regulators, Kalshi, the spearhead platform in the sector, has already gotten a temporary injunction against the Nevada Gaming Control Board, preventing the watchdog from blocking the platform from doing business in the Silver State.
DraftKings may simply be adopting a wait-and-see approach to the prediction market boom, with Kalshi prepared to take up any legal challenge, and so far, winning against regulators that the platform claims have overstepped their oversight and remit.
As to the Commodity Futures Trading Commission (CFTC), the body directly in charge of the sector, there has been no specific pushback against sports contracts in particular. Since prediction markets are coached in different legal terms, challenging them in courts as "sports betting platforms" is a tenuous argument to maintain.
There are no centralized oddsmakers, and traders set the odds themselves based on the handle they "bet" on a certain outcome. This is a developing topic that will see more important events over the coming months, especially with the sports betting industry now facing a real competitor in the form of prediction platforms.
