DraftKings has acquired Railbird Technologies and its wholly owned subsidiary, Railbird Exchange, to officially begin offering prediction markets to users and support the operator's future growth in the gaming type.
"We are excited about the additional opportunity that prediction markets could represent for our business," DraftKings CEO and Co-Founder Jason Robins said.
"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."
Robins originally hinted to Global Gaming Insider of the operator's future plans to enter the prediction markets space in August, as DraftKings is set to unveil its new DraftKings Predictions mobile application within the "coming months."
"This is a transformational moment for our company, and we are thrilled to be a part of the future of DraftKings," Railbird CEO and Co-Founder Miles Saffran said.
"DraftKings' scale and leadership in the industry creates meaningful opportunities for our team and platform."
Financial terms of the agreement have yet to be released, but Railbird Exchange currently serves as a federally licensed exchange designated by the Commodity Futures Trading Commission (CFTC), helping to establish a "strategic foundation" for DraftKings' growth in prediction markets.
DraftKings Predictions will allow users to trade regulated event contracts on "real-world outcomes," including the finance, culture and entertainment industries. While sports-related event contracts were not specified, the operator stated it "may expand" the offering into additional categories "over time."
The news comes just two months after FanDuel formed a partnership with derivatives marketplace CME Group to begin the development of "fully funded, event-based contracts with defined risk," where customers will have the opportunity to "express their views" multiple times a day on numerous markets with "yes" or "no" positions for as low as $1.
As part of the agreement, CME Group and FanDuel will form a new joint venture to operate a non-clearing futures commission merchant (FCM) and offer access to event-based contracts through the sports betting operator. Expected to launch in late 2025, the products will include benchmarks such as the S&P 500 and Nasdaq-100, prices of oil and gas, gold, cryptocurrencies and key economic indicators such as GDP and CPI.
Following regulatory review from the CFTC, event contracts will then be listed on and "subject to the rules" of CME Group exchanges and available to consumers through all participating FCMs.
Multiple regulators have sent warnings to operators regarding the possibility of bringing prediction market offerings to residents, including from states such as Pennsylvania, Michigan and Arizona.
Pennsylvania Gaming Control Board Executive Chair Kevin O'Toole submitted a letter to the state's Senators and Congress outlining serious concerns around prediction markets on October 8, while Michigan Gaming Control Board Executive Director Henry Williams issued an official memorandum to all operators on October 3.
Arizona Department of Gaming Director Jackie Johnson stated if an operator were to be found selling event contracts in a jurisdiction outside of Arizona, it could impact the regulator's decision to issue a license to said entity. Currently, Arizona sports betting laws fail to indicate the legality of sports event contract trading, nor has there been previous litigation concerning the gaming type.
Underdog Fantasy will begin adding predictions to its list of verticals following a partnership formed with Crypto.com on September 2
