DraftKings may have made its prediction on how Kalshi’s effort to keep offering sports-event contracts will end.
Bloomberg reported on April 17 that the Boston-based daily fantasy/sports betting/online casino company in March withdrew an application with the National Futures Association (NFA) that would have allowed “DraftKings Predict” to offer sports prediction markets in every state under the purview of the Commodities Futures Trading Commission.
Kalshi must still fend off state legal action in Nevada, New Jersey, and Ohio to remain under the CFTC’s oversight and continue offering the sports markets. DraftKings first filed an application with the NFA through Gus II LLC in July.
As opposed to wagers offered by sportsbooks, where bettors take positions against the house, exchange or prediction-market players buy shares in the outcomes of events as they would stocks. Kalshi argues that the peer-to-peer framework of the exchange system, and the fact that contracts can be traded, places it squarely under the CFTC’s federal umbrella vs. state regulation.
As state and federal legality of sports contracts comes under sharp industry and court scrutiny, the unsettled question remains whether Kalshi, Crypto.com, and Robinhood are spearheading an attempted destruction of the legal sports betting industry unleashed in the United States after the nullification of the Professional and Amateur Sports Protection Act in 2018.
Kalshi is not an NFA member. Crypto.com is pending and Robinhood has been approved.
Prediction markets say they’re exempt
DraftKings’ move comes as numerous industry observers and an increasing amount of state gambling regulators decry Kalshi’s offering of sports event “contracts” as unregulated and untaxed sports bets. The CFTC is scheduled to consider these claims during an April 30 roundtable.
Kalshi, Crypto.com, and Robinhood were earlier this year served cease-and-desist orders by Nevada, New Jersey, and Ohio.
Kalshi CEO Tarek Mansour said last week at the StrictlyVC event in San Francisco that “state law really doesn’t apply to us.”
Kalshi claimed an early victory this month when U.S. District Court Judge Andrew Gordon granted its preliminary injunction to stop Nevada’s cease-and-desist order. While gambling industry observers believe that Kalshi’s fight will be a lengthy one, DraftKings has exited the fray — coincidentally, if not strategically — before it could suffer collateral damage. The company offers online sports betting in 26 states, including New Jersey and Ohio.
A DraftKings spokesperson told InGame in an email: “DraftKings continues to monitor developments related to prediction markets as an emerging product that reflects evolving consumer engagement and warrants thoughtful consideration.”
A previous diversification attempt also preceded significant pushback. DraftKings bought Jackpocket in February of 2024, but several states including Arizona, Florida, and Texas have since banned lottery courier services as unregulated operations attempting to circumvent legal loopholes.
