DraftKings Acquires Railbird to Launch Prediction Market App

DraftKings’ acquisition of Railbird represents a calculated move into the rapidly expanding prediction market space, coming at a pivotal moment when weekly market volume has broken the $2 billion barrier for the first time. The undisclosed deal, which had been rumored for months, positions DraftKings to leverage Railbird’s designated contract market license from the Commodities Futures Trading Commission (CFTC), obtained in June, which allows the platform to self-certify and offer event contracts without individual state approvals. This strategic timing aligns with industry projections from Certuity estimating prediction markets could reach $95.5 billion by 2035, growing at a compound annual rate of 46.8%.

DraftKings CEO and co-founder Jason Robins emphasized the strategic value in a press release, stating 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 sentiment was echoed by Railbird CEO Miles Saffran, who called the acquisition “a transformational moment for our company” that creates “meaningful opportunities for our team and platform” through DraftKings’ industry leadership and scale.

The launch of DraftKings Predictions introduces complex regulatory considerations for a company that currently holds 29 sports betting licenses across states like Missouri. According to Paul Zilm, a sports betting operations expert and trader at prediction market firm Mojo, “Some states they already operate in have been vocal that launching prediction markets in their states may jeopardize their regulated gambling license.” This regulatory tension is compounded by ongoing legal battles involving competitor Kalshi, which has faced challenges from multiple states and Native American tribes over jurisdiction, operating on the premise that CFTC regulation supersedes state licensing requirements.

DraftKings appears to be navigating these complexities by initially focusing its prediction market app on states without legal sports betting, according to sources familiar with the company’s plans. The new app will connect to multiple exchanges and expand into additional categories over time, leaving the door open for potential sports event contracts in the future. This cautious approach reflects the delicate balance DraftKings must maintain between expanding into new markets and protecting its existing state gambling licenses.

DraftKings’ entry into prediction markets comes during a period of intense activity and consolidation within the industry. Current volume leader Polymarket recently acquired CFTC-licensed derivatives exchange QCX for $112 million and began self-certifying its own event contracts at the start of the month. This flurry of deals and surging interest underscores the competitive dynamics as major players position themselves in a market experiencing unprecedented growth.

The market response to DraftKings’ strategic move has been positive, with DKNG stock trading at $34.60 in early Wednesday trading after gaining 3.21% in pre-market activity, following a 0.06% gain to $33.62 at Tuesday’s close. This investor enthusiasm reflects confidence in DraftKings’ ability to leverage its established brand and mobile expertise to capture market share in the expanding prediction market ecosystem, which now offers contracts spanning finance, culture, and entertainment topics alongside traditional event forecasting.