Can DraftKings Parlay Sports Betting Success Into Emerging Prediction Market Sector?
Prediction markets may be similar to online sports betting, but success there isn't necessarily a slam dunk for DraftKings.
Eight years ago, DraftKings, along with rival FanDuel, was uniquely positioned to become America’s sports betting giants. They had money to burn and a nationwide customer base already in place.
No one has really challenged in the sector, but there’s a new game emerging. Prediction markets. Maybe you’ve heard about them. On Friday, while DraftKings stock fell hard after investors did not like the company’s fourth-quarter earnings report, the biggest takeaway from the company’s call with analysts was its confidence that it can also ascend to the top in prediction markets.
CEO Jason Robbins mentioned the word prediction 22 times in his seven-minute-plus opening statement, and naturally, most of the participating analysts responded with questions about what it means for the company and its stock price.
He called it “the most exciting new growth opportunity” since the U.S. Supreme Court struck down PASPA in 2018.
Predictions is rapidly developing into a massive incremental opportunity, and we are moving with urgency,” he said. “We expect to emerge as the leader in this nascent category. We plan to deploy growth capital to build the best customer experience in predictions and acquire millions of customers this year.”
More details about how that will happen will come in a couple weeks when DraftKings hosts its virtual Investor Day presentation on March 2.
Why DraftKings Can Succeed
Prediction markets obviously make sense for DraftKings (and FanDuel and Fanatics, too). Robbins and his team see where the winds are blowing right now, and in Washington, those winds are blowing in favor of a massive expansion of what prediction markets can offer.
At the very least, the Trump Administration’s position that prediction market operators can offer contracts on sports gives DraftKings an entry into California and Texas, as well as every other state that has not legalized sports betting. It also opens the door to Florida, which legalized sports betting but gave the Seminole Tribe exclusive rights. Those three states alone give DraftKings access to 75 million adults age 18 and older.
Just to sort of paint the picture of why we’re excited, it would be like if you told me, we opened up the rest of the U.S. overnight to some lesser version – but still very strong version of – sports (betting) that could really monetize the customers and engage the customers in ways that we never were able to with fantasy sports,” Robbins said Friday.
Where DraftKings and others see the potential for making money in exchanges is through its market maker product. Through market making, DraftKings can set prices on a variety of markets and buy or sell with interested traders.
There’s also the potential for parlay products in prediction markets, too, and we know just what parlays have meant for DraftKings bottom line in sports betting.
“We are targeting hundreds of millions in annual revenue for DraftKings Predictions in the years ahead,” Robbins said. “We believe there is much more upside over the long term. This should translate to meaningful, incremental adjusted EBITDA. In predictions, we have the playbook to execute and win.”
DraftKings’ Biggest PM Challenge
Yes, DraftKings does have the past performance through sports betting and daily fantasy sports to give people confidence that it can succeed in this new gaming frontier.
However, this isn’t 2018, and the competition isn’t casino operators ill-prepared for online gambling or European operators and other entrepreneurs ill-equipped to match DraftKings promotional spending.
The main competitors DraftKings will face in the prediction markets are the modern equivalent of what Robbins and his DraftKings cohorts were 14 years ago. Existing prediction markets already have core customers, too, and they’re busy working to attract more to their sites.
DraftKings will likely need to scoop up some of those Polymarket and Kalshi traders to truly be successful in the sector. There’s a chance those traders are more brand-agnostic than I give them credit for, but I can also see those individuals identifying DraftKings (and FanDuel and Fanatics) prediction market product as the Steve Buscemi character in the popular GIF.
In other words, this time around DraftKings isn’t the innovator.
As we’ve already seen, 2026 has not gotten off to the best start for DraftKings. With the emphasis Robbins is putting on prediction markets, the company may not be able to afford a less-than-successful start there.
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