DraftKings is making a strategic move by acquiring the predictions platform Railbird as part of its plan to launch a new mobile platform named DraftKings Predictions in the upcoming months. Railbird, which is licensed by the Commodity Futures Trading Commission, operates an event contracts exchange. This acquisition is primarily motivated by DraftKings’ interest in Railbird’s talented team and proprietary technology.
DraftKings CEO Jason Robins expressed enthusiasm for the potential of prediction markets, highlighting how this new venture could provide additional growth opportunities for the company. He stated, “We are excited about the additional opportunity that prediction markets could represent for our business. 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.”
The introduction of prediction markets is significant as it allows customers to engage in trading on the outcomes of various events across finance, culture, and entertainment, thus enabling DraftKings to venture beyond its traditional sports betting operations. However, this sector has raised concerns, particularly related to the trading of election outcomes and sports events, with some states viewing them as unlicensed gambling.
States like Nevada are actively warning companies that offering these types of prediction trades on sports events could jeopardize their gaming licenses. Consequently, if DraftKings chooses to offer sports event contracts, it is likely to target states that do not have existing licensed sports betting, such as California and Texas. This approach suggests a careful strategy to navigate regulatory challenges while potentially maximizing their market reach. Furthermore, DraftKings intends to implement advanced “know your customer” measures to enhance identity verification, drawing from its established experience in the regulated gambling market.
In summary, DraftKings’ acquisition of Railbird not only bolsters its technology and team but also opens new pathways for growth in the predictions market, allowing the company to leverage its expertise while expanding its offerings beyond sports betting. This strategic move highlights DraftKings’ commitment to innovation and adaptation in the evolving landscape of gaming and predictions.