DraftKings rebounds after Wall Street hears its prediction market plans
The company plans to launch its own predictions product in the coming months.
DraftKings more than reversed its 11% drop in the wake of its post-close earnings report Thursday, after briefing analysts in its earnings call about its plan to get its own prediction markets business up and running “in the coming months.”
Sportsbooks like DraftKings — and FanDuel, which is owned by Flutter Entertainment — have been battered in recent months, as it has become clear that gamblers are now often turning to prediction markets like Kalshi to take positions on the outcomes of NFL games rather than making bets on traditional sportsbooks.
DraftKings responded by recently buying CFTC-licensed derivatives exchange Railbird as it moves quickly to get its own prediction markets business up and running.
Prediction markets are currently federally regulated as financial derivatives by the CFTC — though there is ongoing litigation in which state gambling regulators argue that prediction markets should be subject to state laws on sports gambling.
At any rate, DraftKings executives told Wall Street analysts in a post-earnings conference call early Friday that it views these markets as a significant opportunity to expand into states where sports gambling is currently illegal.
In his opening remarks on the conference call, DraftKings CEO Jason Robins had this to say on the topic:
“We are excited about our pending launch of DraftKings predictions and its potential to expand our total addressable market in the coming months. We expect DraftKings predictions to enter many new states with sport event contracts, unlocking a new customer base and revenue stream.
Nearly half the country’s population remains without access to legal online sports betting. But there are several other companies offering federally regulated predictions in all 50 states as growth in predictions continues. This may also motivate more states to legalize online sports betting and iGaming with reasonable regulation and taxation.”
DraftKings has other growth strategies in the works as well, such as a Spanish-language version of its betting app “that will meet the demands for a growing audience ahead of the World Cup in 2026.”
The market clearly likes what it heard more than it liked the look of the numbers yesterday: the company fell short of sales expectations and trimmed its full-year guidance. After falling roughly 11% after-hours, DraftKings regained all that ground and is up more than 3%.
