DraftKings Moves into Prediction Markets by Buying Railbird

The soon-to-launch DraftKings Predictions app will initially center on non-sports areas such as finance, entertainment, and global affairsImage Source: Shutterstock.com

DraftKingshas bought Railbird Technologies Inc.and its subsidiary Railbird Exchange, ngaking a big step into the regulated prediction market world. 

DraftKings Uses Railbird’s CFTC License to Create Event-Trading App

The Boston-based gaming company shared the news on Tuesday, highlighting that Railbird’s tech and federal licenses will be the foundation for its new product, DraftKings Predictions— a mobile app that will let users trade event contracts based on real-world results.

Railbird,set up in 2021 and supported by Y Combinator, works as a Commodity Futures Trading Commission (CFTC)–approvedexchange, letting it host and clear event-based futures contracts. Its CFTC approval earlier this year put it in a small group of recognizedprediction platforms, a position that DraftKingscan now use without going through the long regulatory process needed for its own approval.

DraftKings CEO Jason Robinsthinks prediction markets fit into the company’s wider gaming and entertainment world. He hinted that mixing Railbird’s know-how with DraftKings’ existingsetup and customer base could give the company a clear leg up as the market for event contracts keeps growing.

The upcoming DraftKings Predictions appwill start by focusing on non-sports areaslike finance, pop culture, and world events. The company said the platform can work with multiple exchanges, letting it offer more markets and team up with other CFTC-registered platforms. While sports markets will not be included at first, DraftKings hinted that new categories might be added as rules change over time.

Railbird CEO Notes DraftKings Buyout a Big Step for the Company

Miles Saffran, who co-founded Railbird and serves as its CEO, sees the acquisition as a game-changer for his team. He highlights the chances that come with joining a big name in the gaming world. Railbirdhas not yet opened its exchange to the public. The company planned to use QC Clearing, a part of Polymarket, to handle how trades are settled and transactions are managed.

DraftKingsmakes this move at a critical moment. In the last two months, its stock price has seen big swings as prediction markets like Kalshi grew popular and drew users across the country. Experts think that by joining the regulated event-contract field, DraftKingscould balance out the ups and downs affecting its main sports betting business, which still faces different rules in each state.

DraftKingsdid not share how much they paid to acquire the company, but they said the new app would launch in the coming months. This launch will be the company’s first big step into markets under federal control, instead of state-by-state gambling laws, showing a change in how they plan to grow from now on.