DraftKings Shifts to Its In-House Prediction Markets

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DraftKings Shifts to Own Exchange for Prediction Markets

Despite initial beliefs that DraftKings was operating solo in their prediction market business, it has been revealed that they have been leveraging markets from other exchanges. Not initially set up with their own proprietary operation, DraftKings has utilized the offerings from partners such as CME Group—a commodities exchange with a prediction market operation—and Crypto.com. This approach allowed DraftKings to present these external markets as part of their service.

Recently, DraftKings acquired a company named Rail Bird, enabling them to facilitate their own exchange similar to platforms like Calci and Polymarket. This move, although costly, grants them greater control over their operations and the potential to significantly boost their revenue. Previously, operating as a pass-through for external markets, the integration of their own exchange should transform their business model, enhancing their ability to generate income through fees and trading.

This strategic transition was detailed around the time of their Q1 earnings call and their introduction of separate prediction markets apart from their sportsbook offerings. DraftKings plans to fully operationalize their own exchange before the end of the quarter, aiming to be well-prepared for the upcoming football season.