DraftKings has launched a new standalone prediction markets app across 38 US states, marking a strategic move beyond traditional sports betting.
The debut of DraftKings Predictions, overseen by the US Commodity Futures Trading Commission (CFTC), sees the sportsbook step into the world of federally regulated event trading that has caused controversy and division within the sports betting industry in the States.
It is also drawing attention from UK and EU betting regulators, where similar products would fall under far stricter gambling rules.
DraftKings Predictions Is A Watershed Moment
The Boston-based iGaming giant unveiled its DraftKings Predictions mobile and web app on Friday.
It has been launched in partnership with derivatives provider CME Group and it will gradually integrate capabilities from recent acquisition Railbird Exchange.
The app will allow customers to trade on real-world outcomes across sports and finance, with entertainment and culture expected to be added in future.
Today, we announced the launch of DraftKings Predictions, marking our entry into prediction markets.
Full press release available here: https://t.co/PDSCxD9j78 pic.twitter.com/MPgXK5fgzh
— DraftKings News (@DraftKingsNews) December 19, 2025
Users effectively back a yes or no answer to key questions around a particular event.
It means that DraftKings can now trade in sports contracts in states such as California, Texas and Geogia where traditional sports betting is illegal.
Chief Product Officer Corey Gottlieb said the new offering underscores the company’s commitment to delivering products that “tap into the passion of our customers”.
It will also enable DraftKings to leverage strategic media relationships and create a “real-time product that moves at the speed of sports”.
How US Prediction Markets Operate Outside State Sports Betting Laws
The rise in popularity of prediction markets has seen a steep upward curve through 2025.
Major players Kalshi and Polymarket have been in existence for around five years, but it took the US presidential election in 2024 for the concept to explode into life.
Kalshi won approval in the federal appeals court to legally host markets around the election for the first time.
CEO and co-founder, Tarek Mansour, said the response was ‘astronomical’ with over $1 billion of trades in the month leading up to polling day.
Kalshi announced plans to offer sports prediction markets at the start of this year, beginning with Super Bowl LIX.
The sports betting industry jumped in to object.
Federal Versus State Legislation
State governors have oversight over betting in the US.
Each state issues its own gambling licenses and approved operators are subject to local tax revenue laws with legislative obligations.
Prediction markets are federally regulated and they are allowed to operate outside the auspices of local state regulations.
They do not have to contribute to state tax or adhere to the usual customer protection policies set around gambling.
State governors have tried to tackle this issue through the courts, arguing that sports prediction markets are simply sports betting by another name.
Kalshi and Polymarket continue to evolve and expand as those battles rage on.
It was up to sassy satirical series South Park to show that the prediction markets behemoths had truly ‘made it’.
Cartman explains the concept to the entire nation in an episode titled Conflict Of Interest.
“Prediction Market app dude,” says Cartman.
“You know, online peer-to-peer betting.”
This week British boxer Anthony Joshua used Polymarket to back up his KO prediction for his heavyweight clash with Jake Paul.
DraftKings, FanDuel And Fanatics Lead The Breakaway
The American Gaming Association (AGA) is the national trade group representing US casinos, gaming manufacturers and online sportsbooks.
The AGA has remained totally aligned with state regulators who are adamant that sports prediction markets are gambling.
All of its members were in agreement too.
As time went on, the potential gains to be had from entering the marketplace proved too much to ignore.
DraftKings and FanDuel resigned in November
Both acknowledged that their switch to embrace prediction markets was “not aligned” with the AGA’s priorities for its members.
Fanatics announced it too had resigned after launching Fanatics Markets on December 3.
Could Prediction Markets Work In The UK?
Yes, prediction markets could work in the UK.
Assuming the demand is there, the next obstacle is negotiating the legislation.
The system in the UK is far stricter and more complicated than the CFTC process in the US.
It does not allow for a ‘one-stop shop’ provider such as Kalshi or Polymarket to exist.
Markets that resemble financial derivatives fall under the auspices of the Financial Conduct Authority (FCA).
The UK Gambling Commission (UKGC) regulates sports betting along with other non-political events such as the Oscars or Strictly.
Political betting is only allowed when the operator is UKGC-licensed.
FCA rules do not allow financial-style event trading on politics.
Matchbook To Be UK’s First Prediction Markets Provider
Matchbook has announced its intention to launch the UK’s first prediction markets product early next year.
The sports betting exchange is working on Matchbook Predictions.
It believes the solution will appeal to operators as pricing reflects crowd sentiment and will not require a trading desk.
Matchbook is developing its offering through its UKGC approval to produce a fully compliant route into the marketplace.
That will not include financial markets at present as it not regulated by the FCA.
Prediction Markets And The Future Of Regulated Gambling
Prediction markets remain a relatively small segment compared with mainstream sports betting.
With DraftKings joining FanDuel and Fanatics in the marketplace, it underlines growing interest in alternatives outside of traditional gambling frameworks.
We should get a taste of just how popular sports prediction markets will be once we see trading compared with traditional betting around a big tournament like the 2026 World Cup.
In the UK, legal roadblocks remain significant.
A ban on certain binary trading products and strict FCA oversight create barriers for prediction markets launching in this country.
Recent developments in the US show us that event-based trading is challenging how we should be defining betting in future.
