DraftKings has acquired Railbird to accelerate its expansion into prediction markets, although sports event contracts will remain off the table.
The Boston-based giant announced it had acquired the Commodity Futures Trading Commission (CFTC)-licensed business last night, 21 October, in an undisclosed deal.
The news sparked a 7% bump in DraftKings shares at one point in after-hours trading, reversing some of the declines the New York-list firm has experienced in recent months due largely to the threat posed by prediction markets.
As part of the deal, DraftKings will acquire Railbird Technologies Inc and its wholly owned subsidiary, Railbird Exchange, and in turn launch DraftKings Predictions in the coming months.
Management said the prediction market offering would allow customers to trade event contracts on “real-world outcomes” in finance, culture and entertainment.
There was no mention of sports in the press release, with the legality of sports event contracts still up in the air amid a flurry of court cases across the US.
DraftKings said the product will have the “flexibility to connect multiple exchanges”, meaning DraftKings Predictions could feature contracts from other federally regulated prediction markets.
“Its offering may expand into additional categories over time, deepening customer engagement and extending DraftKings’ addressable audience,” the company said.
DraftKings had been linked with a move for Railbird this summer in a report from Front Office Sports.
Railbird, despite being licensed by the CFTC, is not yet live. The firm was ratified by the CFTC in the summer as a designated contract market (DCM), which is similar to Kalshi.
DraftKings’ expansion into the prediction markets space comes after its closest rival FanDuel penned a deal with CME Group to enter the vertical via a JV.
The partnership will also not include sports event contracts but instead allow uses to trade contracts on financial markets like the price of gold, oil and crypto.
Speaking to EGR in Las Vegas, BetMGM CEO Adam Greenblatt said the operator would not expand into the space, given the indications from US state regulators that sports event contracts constitute gambling.
Kalshi, Robinhood and Crypto.com have all faced the ire of state-level regulators over their sports event contracts.
The prediction market platforms all argued they are regulated at a federal level by the CFTC, and therefore do not need to be licensed on a state-by-state basis.
Throughout the acquisition process, Sullivan & Cromwell served as DraftKings’ legal counsel.
Moelis & Company acted as Railbird’s financial adviser, and Proskauer Rose and Kirkland & Ellis served as its legal counsel.
Jason Robins, DraftKings CEO, said: “We are excited about the additional opportunity that prediction markets could represent for our business.
“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, Railbird CEO and co-founder, added: “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.”
The post DraftKings snaps up Railbird to launch prediction markets offering first appeared on EGR Intel.
Standalone DraftKings Predictions app to be rolled out in the coming months, after US online sports betting and igaming giant acquires CFTC-licensed platform
The post DraftKings snaps up Railbird to launch prediction markets offering first appeared on EGR Intel.