DraftKings Acquires CFTC-Licensed Railbird Exchange to Enter Prediction Markets

DraftKings has acquired Railbird Technologies Inc. and its wholly owned subsidiary, Railbird Exchange, LLC, marking the company’s strategic entry into the prediction markets sector. Railbird operates as a federally licensed exchange designated by the Commodity Futures Trading Commission (CFTC).

The acquisition positions DraftKings to expand its addressable market opportunity through regulated event contracts. Railbird’s proprietary technology and experienced team provide a foundation for the company’s growth in this sector, enabling advantaged economics and long-term product differentiation.

DraftKings Predictions Platform Launch

The company confirmed plans to launch DraftKings Predictions, a mobile application expected to debut in the coming months. The platform will allow customers to trade regulated event contracts on real-world outcomes across finance, culture, and entertainment.

The product is designed with flexibility to connect to multiple exchanges, enabling DraftKings to offer a broad suite of markets to its customers. The company indicated that its offerings may expand into additional categories over time, deepening customer engagement and extending its addressable audience.

"We are excited about the additional opportunity that prediction markets could represent for our business," said Jason Robins, CEO and Co-Founder of DraftKings. "We believe that Railbird’s team and platform—combined with DraftKings’ scale, trusted brand, and proven expertise in mobile-first products—positions us to win in this incremental space."

Miles Saffran, CEO and Co-Founder of Railbird, stated: "This is a transformational moment for our company, and we are thrilled to be a part of the future of DraftKings. DraftKings’ scale and leadership in the industry creates meaningful opportunities for our team and platform."

Regulatory Landscape and Sports Event Contracts

DraftKings did not specifically address sports event contracts in its announcement. The omission appears strategic, as multiple state gaming regulators have warned licensed operators about offering sports-related prediction markets.

The Michigan Gaming Control Board sent letters to licensed operators earlier this month, warning that participation in prediction markets offering sporting event contracts could impact future licensure decisions in the state. Ohio Casino Control Commission issued similar warnings to its operators, prompting prediction market company Kalshi to file a lawsuit against the commission and the Ohio Attorney General. Arizona and Nevada gaming regulatory bodies have also sent comparable notices to operators.

Nevada is among the states warning that companies risk losing their gambling licenses if they offer sports in their prediction markets. Industry analysts suggest that if DraftKings offers sports event contracts, the company would likely focus on states without licensed sports betting, such as California and Texas, to avoid regulatory conflicts in markets where it currently operates sports betting.

Competitive Landscape

The acquisition represents DraftKings’ response to the rapid growth of prediction markets platforms. Kalshi, which launched sports event contracts in January, has expanded its offerings to include products allowing users to trade on player performance metrics, point spreads, and game outcomes. The company recently raised $300 million and maintains that its products constitute trading rather than sports betting.

FanDuel announced a partnership with CME Group in August to enter prediction markets, though a formal product has not yet launched. Underdog partnered with Crypto.com in September to provide prediction markets in the Underdog app, becoming the first hybrid product from a licensed sports gaming company.

Polymarket recently raised $2 billion from the operator of the New York Stock Exchange and is expected to relaunch in the U.S. after being barred from operating in the country since 2022.

About DraftKings

DraftKings operates mobile and retail sports betting operations in 28 states, Washington, D.C., and Ontario, Canada. The company operates iGaming in five states and Ontario under its DraftKings brand, and in four states and Ontario under its Golden Nugget Online Gaming brand. DraftKings also owns Jackpocket, a digital lottery courier app.

The company’s daily fantasy sports product is available in 44 states, the District of Columbia, and certain Canadian provinces. DraftKings serves as an official sports betting and daily fantasy partner of the NFL, NHL, PGA TOUR, WNBA, and UFC, as well as an official daily fantasy partner of NASCAR, an official sports betting partner of the NBA, and an authorized gaming operator of MLB.

Sullivan & Cromwell LLP served as legal counsel to DraftKings for the transaction. Moelis & Company LLC acted as financial advisor to Railbird, with Proskauer Rose LLP and Kirkland & Ellis LLP serving as legal counsel.

Financial terms of the transaction were not disclosed. Analysts suggest the deal likely includes small upfront costs with earn-outs over multi-year timeframes based on achieving certain financial objectives.

DraftKings is scheduled to report its next earnings on October 31, 2025.

Source: CNBC