DraftKings Predict Withdraws Application from Prediction Markets Trade Group

DraftKings Predict Withdraws Application for Prediction Markets Trade Group

• DraftKings Predict has withdrawn its application from a self-regulatory prediction market organization.
• It remains uncertain whether DraftKings intends to completely abandon prediction markets.
• The sports betting industry is currently at odds with platforms like Kalshi and Robinhood.

DraftKings has built a reputation for capitalizing on opportunities as they arise. Despite expressing criticism towards Robinhood and Kalshi – two platforms that have started offering markets on future sports events and have expanded their services just in time for March Madness – DraftKings aimed to join a regulatory trade group dedicated to prediction markets and derivatives. Their application might have been under review by the trade group since June 30, 2024.

This action suggested that DraftKings understood the potential value of prediction markets as a promising avenue in sports betting or, at the very least, as an additional platform for engaging sports enthusiasts.

Although not officially categorized as sports betting platforms, prediction markets have gained significant popularity among sports fans. They foster increased engagement by allowing the public to bet against each other and set the odds themselves, as opposed to relying on traditional oddsmakers like DraftKings, FanDuel, BetMGM, and others.

While the excitement around prediction markets is still unfolding, the DraftKings Predict platform, the entity applying to the National Futures Association (NFA) – a self-regulatory body representing the derivatives industry in the U.S. – has been withdrawn, as reported by Bloomberg.

The withdrawal from the NFA does not necessarily indicate that DraftKings has given up on entering this sector or launching its own prediction market. Similar to the early days of daily fantasy sports before sports betting was legalized, prediction markets could potentially be established nationwide, as they are not considered illegal.

Prediction Markets Navigate a Complex Regulatory Environment

Despite facing significant resistance from multiple states and their gambling regulators, Kalshi, a leading platform in the field, has successfully secured a temporary injunction against the Nevada Gaming Control Board. This injunction prevents the board from impeding the platform’s operations within the state.

DraftKings might be taking a cautious approach by observing the evolution of prediction markets, as Kalshi is prepared to challenge any legal obstacles and has so far succeeded against regulators that the platform argues have exceeded their authority.

Regarding the Commodity Futures Trading Commission (CFTC), the entity responsible for overseeing the sector, there has been no particular opposition to sports contracts. Since prediction markets are framed using distinct legal terminology, classifying them as ‘sports betting platforms’ in a legal context is a challenging argument to sustain.

In prediction markets, there are no centralized oddsmakers; instead, traders determine the odds based on their ‘bets’ on specific outcomes. This is an evolving topic that is likely to witness significant developments in the coming months, especially as the sports betting industry encounters a formidable competitor in the form of prediction platforms.