DraftKings’ newly launched in-house exchange has so far handled only a sliver of the company’s prediction market volume, in what appears to be a deliberate slow rollout.
Despite announcing its launch last week, volume so far on DKeX is minimal, with the vast majority of trades on the DraftKings Predictions app still going through Crypto.com or CME, analysis by InGame and PredictionMarketPulse shows.
The low level of volume in the early days has been purposeful, as part of an effort to ensure the product that goes live is as strong as possible, a source familiar with the situation told InGame.
“This is the first batter of the first inning of a seven-game series, maybe even the first pitch,” they said.
Volume in thousands
DraftKings announced the launch of its in-house exchange on June 26, eight months after buying CFTC-registered Railbird. That launch prompted DraftKings shares to rise 11.3% in a single day, undoing the prior four days’ declines and adding $1.3 billion to the company’s market value.
However, DKeX’s daily trade data shows only thousands of dollars traded on even the highest-volume days, and some days with no volume whatsoever. Volume so far has been almost entirely on MLB markets.
In contrast, Kalshi volume regularly exceeds $1 billion per day while volume on Crypto.com — where most DraftKings Predictions orders appear to be routed to — is typically upward of $40 million.
DraftKings said Friday that DraftKings Predictions, while routing customers to Crypto.com and CME, had processed around $11.3 billion in annualized total trading volume for the week ended June 21 and $3.4 billion in annualized “consumer volume” — volume from the taker side, which is a closer proxy to sportsbook handle — for the same period. That would mean that overall trading volume over the week was around $216 million, or $31 million per day. Consumer volume would have been $65 million, or $9.3 million per day.
If total volume on DraftKings Predictions has held steady since DKeX launched, daily trade figures suggest that the in-house exchange is about 0.02% of total volume.
DKeX launched about a month after Robinhood’s in-house exchange Rothera. Like DraftKings, Robinhood already had a strong customer base trading tens of millions of dollars a day through its prediction market app on third-party exchanges. Before launching Rothera, Robinhood said its users were trading upward of $3 billion worth of event contracts per month. However, Robinhood did get involved in prediction markets well before DraftKings.
In the first few days after launching, Robinhood still routed the vast majority of volume to Kalshi, but single-day volume still topped $2 million, or about 2% of Robinhood volume, within days of the launch. Most of Rothera’s growth, though, came in the weeks that followed, with volume topping $100 million per day by mid-June.
The source said that the volume picture on DKeX could look very different to where it is now within a matter of weeks.
The business hopes to launch DKeX-exclusive markets further down the line.
In early phases
An analysis by PredictionMarketPulse, shared with InGame, found that the exchange is still in the early phases of its launch.
On Friday, when DraftKings announced that DKeX had launched, PredictionMarketPulse reviewed “a wide range of the markets the DraftKings Predictions app surfaced.”
PredictionMarketPulse also noted that open interest — the value of positions traders are actively holding — was “effectively zero,” suggesting virtually all trades that did occur were settled by the end of the day. It also pointed out that most activity on DKeX was for partial-game winner markets, a market that is naturally going to gather less interest than a full-game moneyline. Open interest, the analysis said, could be the first sign that large institutional traders or market makers are getting on board.
“Recruiting market makers is a normal and necessary step in standing up an exchange with ample liquidity — and it is the step that comes before an exchange carries real open interest, which is what DKeX’s reports currently show,” the report said.
DraftKings has been working with market makers for months, but it is not clear how many are actively trading now compared to those who may start trading soon.
Not abnormal, but is word ‘launch’ fair?
The report argued that this type of slow rollout is far from abnormal, but questioned whether the word “launch” was the right one for the phase of changes that began on June 26.
“None of this is unusual for a freshly designated venue. Listing a catalog and seeding initial markets routinely precedes consumer routing, and rollouts are typically phased. The public record simply shows DKeX at an earlier stage than the single word ‘launch’ conveys.”
