DraftKings Remains Wary as Prediction Markets Gain Popularity

DraftKings is taking a careful approach to joining the growing field of prediction markets, despite the increasing popularity of these platforms across the US. 

DraftKings Adopts Measured Approach to Emerging Prediction Markets

David Katz, an analyst at Jefferies, talked with company leaders at an investment conference in New York. He reports that DraftKings does not plan to rush into the market for binary event contracts. This new area lets users place bets on yes/no outcomes of real-world events.

Katz called the company’s approach “measured,” hinting that DraftKings is looking into the field but not rushing to join it soon. This caution stands out given the buzz that FanDuel might team up with Kalshi, a prediction market under federal rules. Such a move could give FanDuel an advantage by growing into states where regular sports betting faces limits.

While FanDuel or its parent company, Flutter Entertainment, has not said anything, Flutter CEO Peter Jackson has shown interest in prediction-based products before. He has previously pointed out that the company already runs Betfair Exchange, seen as one of the world’s biggest betting exchanges, suggesting they are ready to change if the chance comes up.

Analysts Bullish on DraftKings Despite Prediction Market Withdrawal

DraftKings, in contrast to Flutter, withdrew its application to the National Futures Association in April, stopping its plans to launch a platform called DraftKings Predict. The company has not addressed why it changed course, but this move happened right before the Commodity Futures Trading Commission (CFTC) was supposed to hold a regulatory roundtable, hinting at possible worries about legal gray areas.

Katz pointed out that sportsbook operators now recognize how prediction markets could shake up their industry. If these platforms begin to offer popular features like parlays, a key part of traditional sports betting, companies such as DraftKings might need to think again about their position.

Behind the scenes, DraftKings keeps getting positive predictions from Wall Street. Katz stuck to his $60 price target for the stock, which could mean a 50% jump from where it is now. Other experts agree, with targets between $54 and $65. However, when you look at what insiders are doing, things get tricky.

In the last six months, company executives have sold millions of shares without buying any new ones. The rules are still taking shape, and rivals are testing the waters. So, DraftKings seems to be taking its time, watching and waiting instead of rushing into a market that might change how online betting works in the future.