You might call it a significant development.
DraftKings has announced the launch of DraftKings Predictions, a new venture into the world of prediction markets.
DraftKings Predictions is a new platform where users can make predictions and trade on the outcomes of various real-world events. Initially, it offers a range of markets like sports, finance, commodities, and even cryptocurrencies.
The app and web product will allow customers in 38 states to participate, with avenues opening in high-interest states such as California, Florida, Georgia, and Texas. Accessibility depends on a user’s residence rather than their physical location.
This marks DraftKings' formal entry into the prediction market space, under the watchful eye of the U.S. Commodity Futures Trading Commission (CFTC). It comes just weeks after the company split from the American Gaming Association over a dispute tied to prediction markets.
What are Prediction Markets in Relation to Sports Betting?
Prediction markets, particularly in the context of sports, resemble betting in several ways but also present some distinct differences.
In a typical sports bet, you might wager on the outcome of a specific game or event, such as which team will win the Super Bowl. However, prediction markets take this concept a bit further. In these markets, participants can trade contracts based on the outcomes of future events, much like buying or selling stocks.
In the world of sports, this means you could trade contracts based on predictions like the winner of a league, the points a particular player might score, or even broader events like whether a team will reach the playoffs.
The market operates by allowing participants to buy shares in these potential outcomes. If the event you bet on happens, you profit; if not, you may lose your investment. It's all about analyzing data, making informed predictions, and managing risk—much like other financial markets.
What Can You Do on DraftKings Predictions?
In the sports category, users in 17 states can predict outcomes for major leagues like the NBA, NFL, NHL, college football, and college basketball. However, it's important to note that parlays, which are combinations of multiple bets, aren't allowed on this platform. Instead, you can trade on the point spread, alternate spreads, and outright winners for these sports.
Beyond sports, DraftKings Predictions also lets users trade on financial events. This includes predicting stock index prices at different times of the day. Additionally, the app supports markets for commodities, cryptocurrencies, and other economic events, giving users more ways to engage.
To mark the launch, DraftKings is offering customers a chance to win $1 million through various participation options. In select states where sports event contracts are available, customers can receive a trade bonus of up to $25 on their first trade.
Where Can You Use DraftKings Predictions for Sports?
The 17 states where sports trading is available are mainly those without an established mobile sports betting presence. These states are:
- Alabama
- Alaska
- California
- Florida
- Georgia
- Hawaii
- Idaho
- Minnesota
- Nebraska
- New Mexico
- North Dakota
- Oklahoma
- Rhode Island
- South Carolina
- South Dakota
- Texas
- Utah
Only Florida and Rhode Island allow online sports betting legally. In Florida, this is done through a special agreement with the Seminole Tribe, while Rhode Island has a single sportsbook managed by IGT.
“DraftKings Predictions is a significant milestone and reflects our ongoing commitment to delivering products that tap into the passion of our customers,” said Corey Gottlieb, Chief Product Officer of DraftKings.
“We will create an unparalleled customer experience, leveraging key strategic relationships like ESPN and NBCUniversal to provide an authentic, real-time product that moves at the speed of sports. Along with our operational footprint, marketing and analytics infrastructure and advanced in-house technology, we believe we are uniquely positioned to lead this space over the long term,” added.
Where Is DraftKings Predictions Not Available?
There are 12 states where DraftKings Predictions has not launched, mostly because these states have been resistant to prediction markets in the past. These states include:
- Arizona
- Arkansas
- Illinois
- Iowa
- Maine
- Montana
- Nevada
- Ohio
- Pennsylvania
- Tennessee
- Washington
- Vermont
In Connecticut, you can only use the app for financial trading, not sports.
DraftKings Predictions is now available to eligible U.S. residents and is rolling out across major app stores, bringing together the worlds of prediction markets, sports, and finance.
FanDuel Expected to Launch Next
FanDuel is expected to launch its own version of a prediction markets app soon.
FanDuel also broke away from the AGA, and said it would give up its license to operate in Nevada. Nevada's gaming regulators made it clear they won't allow prediction markets for sports or entertainment events.
The decision followed FanDuel's announcement outlining its collaboration with CME Group on prediction markets.
