DraftKings is bringing its prediction markets in-house with the debut of its proprietary exchange, DKeX. This new platform is the result of the company’s acquisition of Railbird Technologies, a registered designated contract market (DCM) operator, which took place last fall. With DKeX, DraftKings can now manage its own event contracts and operations, marking a significant pivot in its business strategy.
Previously, DraftKings Predictions offered markets provided by established entities like CME Group and Crypto.com. Now, leveraging the technology acquired through Railbird and the Commodity Futures Trading Commission (CFTC) license, DKeX will be integrated into DraftKings: Sports & Casino, its comprehensive “super app.”
A press release from DraftKings emphasized that DKeX will enhance its ability to offer unique sports experiences nationwide alongside its prominent sportsbook. CEO Jason Robins stated, “DKeX provides a vertically integrated foundation for DraftKings Predictions, strengthening our prediction markets content and capabilities, giving us greater control over the technology that powers those offerings, and enabling us to move faster as we continue enhancing our unified app.”
DraftKings introduced Predictions in December across 38 states and expanded to 48 states, leaving only Maine and New Hampshire as exceptions. The platform specializes in sports event contracts available in 18 states and has introduced features similar to those found in sportsbooks, including player props, parlay-style combinations, MLB player and futures contracts, additional NBA and NHL markets, and options for international sports. A real-time “Live” interaction tab has also been added, allowing customers to engage during events.
Earlier this month, DraftKings reported a 24% month-over-month growth in its Predictions offering in May, reflecting an annualized consumer volume increase, along with a 34% rise in total volume traded. The company highlighted that since the introduction of combination contracts in mid-May, over 30% of customers have utilized them, indicating a strong appetite for a tailored prediction markets experience. Robins remarked in May that the prediction markets segment was “still in its first inning,” hinting at the potential for future growth.
DraftKings Senior Vice President and General Manager of Prediction Markets, Jeanine Hightower-Sellitto, remarked, “The launch of DKeX and its integration into our unified app is a major step forward in delivering a best-in-class customer experience in sports nationwide. The pace of development across Predictions has been substantial, from expanding our event contract offerings to introducing key features like combos, which customers have quickly embraced. DKeX is the latest milestone in that progression and creates new opportunities to further expand the offering ahead of some of the biggest moments on the sports calendar.”
Analysts from Citizens recently assessed the impact of DraftKings’ Railbird-powered exchange, predicting that with the launch, the company will begin routing significant trading volume away from CME and Crypto.com by the NFL season. They noted, “Currently, the company has no meaningful market-making activity and little volume flowing through its exchange, implying that the figures reported to date are relatively insignificant from an earnings perspective.” They also identified market-making as the most attractive component of the event contracts industry, suggesting it offers superior economics compared to almost every other segment within consumer discretionary, presenting a promising growth trajectory for DraftKings.
