DraftKings Awaiting Regulator Approval to Offer Sports Predictions Market

DraftKings is eyeing a new source of revenue in the US sports betting market.

The Massachusetts-based sportsbook is awaiting approval to launch a sports betting predictions market. The operator has applied to the National Futures Association for a DraftKings Predict platform and is awaiting a decision.

DraftKings started the application process last summer, but the industry has shifted. Prediction markets jumped in popularity with Super Bowl LIX, but that success also brought federal scrutiny. The Commodity Futures Trading Commission CFTC) is investigating the sports betting industry and has ordered certain operators to halt their markets until it is completed.

When the investigation began, the CFTC seemed to be wary of sports prediction markets, but the department now has new leadership. They have taken a more favorable view of the industry, suggesting it will live on.

Not all sportsbook operators approve of these controversial new markets. They have called for increased regulations, arguing that the markets qualify as gambling under US law. While not all operators oppose the industry, they believe it should be subjected to the same regulations and taxes. 

How are Sports Prediction Markets Legal?

Prediction markets are found on trading platforms. They allow customers to buy “contracts” for a team to win an event. If they hit, those contacts increase for a big payout. While this is precisely how the regulated sports betting industry operates, there is one key difference: the opponent.

The regulated sports betting industry has the player facing off against the house, which makes it gambling. Prediction markets have customers betting against each other, which makes it legal in most US states.

Many social sportsbooks can operate across the US by using the same loophole. However, opponents of sports prediction markets point out that those platforms don’t allow players to wager using real cash. They argue that prediction markets accepting real money “contracts” should qualify it as gambling, regardless of a lack of a “house” to play against.