DraftKings has taken a significant step toward entering the prediction markets space by filing an application with the National Futures Association (NFA) for a new business venture called DraftKings Predict.
The application, filed under the name Gus II LLC on July 30, 2024, reveals that DraftKings has been eyeing the prediction markets vertical long before recent high-profile entries by financial platforms. The timing is notable as it predates Crypto.com and Kalshi's December launch of sports event contracts and Robinhood's interest in offering Super Bowl-related prediction markets.
DraftKings declined to comment when contacted about the filing.
The NFA application provides insight into the proposed venture's leadership structure:
Paul Liberman - DraftKings co-founder listed as Director and CEO of DraftKings Predict
Jason Robins - Current DraftKings CEO listed as an "indirect owner"
Alan Ellingson - DraftKings CFO designated as Director and Chief Operating Officer
The filing includes DraftKings' current headquarters address and phone number, suggesting close integration with the company's existing operations.
The NFA serves as the self-regulatory organization for the Commodity Futures Trading Commission (CFTC), the federal agency that oversees derivatives markets. Under the Commodities Exchange Act, firms offering derivatives contracts must register with the CFTC and, with few exceptions, must also be NFA members.
This regulatory path could potentially allow DraftKings to:
Offer prediction markets nationwide, bypassing state-by-state gaming regulations
Compete directly with financial platforms like Crypto.com and Robinhood
Expand its product offerings beyond traditional sports betting and daily fantasy sports
DraftKings CEO Jason Robins has been transparent about the company's interest in prediction markets while emphasizing the need for regulatory clarity.
"It's certainly something that we have keen interest in seeing how it plays out," Robins stated during a recent earnings call. "In the next couple of months, 60 days or so, there's going to be a CFTC ruling and all sorts of other things, so I think we'll know a lot more over the next few months."
At a Morgan Stanley conference, Robins further elaborated, saying prediction markets are "definitely more on the opportunity side" than being a risk, adding: "If there is an opportunity that presents itself, we want to make sure we're prepared for it."
The CFTC announced in February that it would hold a roundtable on "certain sports-related event contracts" to gather input from various stakeholders and develop its approach to regulating prediction markets.
Several factors could influence the CFTC's stance:
Brian Quintenz, a former Kalshi board member, is President Trump's nominee to be the new CFTC chair
The Trump administration is expected to take a more favorable position on events contracts
Legal arguments persist that sports-related contracts constitute gambling rather than legitimate futures trading
DraftKings isn't the only sports betting operator monitoring the prediction market space:
Peter Jackson, CEO of Flutter (FanDuel's parent company), noted they are "monitoring the situation with these sports futures contracts closely," while acknowledging the products "lack the richness of a true sportsbook offering."
BetMGM CEO Adam Greenblatt has indicated his company would "certainly participate" if prediction markets represent a legitimate opportunity.
Despite the optimism surrounding prediction markets, regulatory challenges have already emerged. The Nevada Gaming Control Board recently became the first state regulator to issue a cease-and-desist order to Kalshi, attempting to shut down its operations.
The American Gaming Association has also publicly opposed prediction markets, creating an interesting dynamic where established gaming companies like DraftKings may need to navigate conflicts between federal opportunities and state-level industry relationships.
As the April CFTC ruling approaches, DraftKings appears positioned to move quickly if the regulatory landscape proves favorable to its prediction market ambitions.