DraftKings Eyeing Prediction Betting Opportunities Ahead of Next Election

The comments from the CEO of one of the biggest online gambling companies in the U.S. suggest sports betting and internet casino gambling operators have an interest in claiming some of that business for themselves.

Geoff Zochodne - Senior News Analyst at Covers.com
Geoff Zochodne • Senior News Analyst
Nov 8, 2024 • 12:29 ET • 4 min read
Photo By - SIPA

Online sports betting companies may not let another cycle of presidential election campaigning and wagering pass them by without taking some of that action themselves.

The massive amount of wagering on this year’s election was indeed hard to miss — and DraftKings Inc. now plans on taking a long look to see if there are opportunities for itself in the prediction market business. 

That is at least what DraftKings CEO Jason Robins said during the Boston-based company’s Friday morning conference call for analysts and investors.

One analyst asked Robins for his thoughts on "non-sports betting prediction markets" and whether there is an opportunity there for DraftKings.

"I think it's a very interesting thing," Robins replied. “The market within that that's dominant is election markets, of course, and particularly during presidential elections. So I know there's a lot of tension on it over the last few weeks. I do think there could be a place for it outside of elections, but that's really where the interest seems to be now from a … customer demand side. So, definitely something we're looking at in advance of the next presidential election, and potentially it'll be an opportunity to look at something sooner.”

Robins added that it is a “different framework” for prediction markets, which offer bettors the chance to wager on U.S. election odds, among other things.

Most notably, Kalshi, Robinhood, and others are regulated by the Commodity Futures Trading Commission, not state gaming watchdogs.

“It's not licensed as a betting product, it's licensed as a financial market,” Robins said. “It's definitely a very different thing. So we'll have to see where it fits in the priority list, but it is something we'll plan on looking at ahead of next election for sure.”

There was huge interest in betting on the 2024 presidential election, to the tune of hundreds of millions of dollars staked at entities like Kalshi in the U.S. and Polymarket and Betfair abroad. 

The comments from the CEO of one of the biggest online gambling companies in the U.S. suggest sports betting and internet casino gambling operators have an interest in claiming some of that business for themselves.

That has the potential to shake up the prediction market industry ahead of the next presidential election, and possibly even before. DraftKings, FanDuel, and other online gambling companies already have huge databases of bettors, and could quickly steal market share from incumbents.

However, as Robins noted, prediction markets are regulated differently, so DraftKings or other new entrants would have work to do before they could launch their own versions. His comments also suggest that DraftKings does not expect states to loosen up their rules around election betting anytime soon.

Yes we could

Prediction markets offer contracts for certain outcomes that bettors can purchase, such as "yes" that one candidate will win an election. Bettors can buy and sell these contracts until they are settled, as the prices fluctuate based on trading activity and the news. 

For example, someone could have bought a "yes" contract for Donald Trump to win Tuesday's election for 60 cents. If they are still holding it, they stand to make a profit of 40 cents, as the settlement value of the contracts is typically $1.

This is different from sports betting, where users wager on point spreads, moneylines, and totals. DraftKings took sports betting-style wagers on the U.S. election in the Canadian province of Ontario but was barred by state rules and regulations from doing the same in the U.S. 

That said, many sports bettors were likely wagering on the 2024 election via Kalshi and other prediction markets. They could be quick to adopt a DraftKings-branded version.

A DraftKings prediction market would also fit in with the company’s strategy of trying to ensure its customers don’t lack online gambling options. 

The Boston-based bookmaker offers sports betting, online casino gambling, horse-race wagering, and, via its recent purchase of Jackpocket Inc., lottery tickets.

The prediction-market business may help DraftKings and others smooth over the volatility of online sports betting as well, which stems from the fact that sometimes customers can win and win a lot. 

That volatility was on full display in third-quarter financial results reported by DraftKings on Thursday, as the company said “customer friendly” NFL outcomes in October and November have already forced it to revise its financial forecast for 2024.

DraftKings is now guiding for revenue of between $4.85 billion and $4.95 billion this year, and adjusted EBITDA of $240 million to $280 million. The tough run of NFL results helped reduce the revenue estimate by $250 million and the adjusted EBITDA projection by $120 million, the company said.

“While we experienced the most customer-friendly stretch of NFL sport outcomes we have ever seen early in the fourth quarter, which pressures revenue and Adjusted EBITDA in the short-term, the overall trajectory of our business is strong,” Robins and Chief Financial Officer Alan Ellingson wrote in a letter to shareholders. “We are excited to reiterate our fiscal year 2025 Adjusted EBITDA guidance range of $900 million to $1.0 billion and introduce our inaugural fiscal year 2025 revenue guidance range of $6.2 billion to $6.6 billion (implying 31% year-over-year growth at the midpoints).” 

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Geoff Zochodne, Covers Sports Betting Journalist
Senior News Analyst

Geoff has been writing about the legalization and regulation of sports betting in Canada and the United States for more than three years. His work has included coverage of launches in New York, Ohio, and Ontario, numerous court proceedings, and the decriminalization of single-game wagering by Canadian lawmakers. As an expert on the growing online gambling industry in North America, Geoff has appeared on and been cited by publications and networks such as Axios, TSN Radio, and VSiN. Prior to joining Covers, he spent 10 years as a journalist reporting on business and politics, including a stint at the Ontario legislature. More recently, Geoff’s work has focused on the pending launch of a competitive iGaming market in Alberta, the evolution of major companies within the gambling industry, and efforts by U.S. state regulators to rein in offshore activity and college player prop betting.

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