DraftKings for the first time sent serious volume to its in-house exchange DKeX last week, including millions in parlay volume, in a sign that the business appears ready to seriously ramp up activity on its own exchange during football season.
DraftKings owns DraftKings Predictions — which is a futures commission merchant (FCM) that can direct users to multiple exchanges — and DKeX, which is an exchange itself. Generally, DraftKings Predictions has sent the vast majority of its sports volume to Crypto.com. However, last Thursday and Friday it began what looked to be the first real push to get customers to use its in-house exchange.
DKeX launched in June, but DraftKings has moved slowly in terms of directing customers to the exchange.
Total volume was $10 million on Thursday and $13.4 million on Friday. Before last week, DKeX had never processed more than $1.5 million in volume in a single day.
For the first time, the DKeX volume included parlays, which DKeX self-certified last month. Parlay volume over the course of four days hit $11.3 million.
But on Saturday, college football’s “Week 0,” DKeX seemingly went back to routing the vast majority of sports customers to Crypto.com. Volume fell back to $4 million before declining further Sunday.
DraftKings made $130,000 in DKeX fees Friday, still a low number compared to the company’s overall revenue.
Friday’s performance is likely still short of what would happen if DraftKings Predictions directed all of its sports trades to DKeX for a day. In July, annualized total volume on DraftKings Predictions — across all exchanges — was $11 billion, suggesting volume within the month itself was just under $1 billion, or about $30 million per day.
DraftKings Head of Program Product Mike Barber told InGame that DraftKings would choose which exchange to route customers toward based on what makes the most sense at the time, rather than forcing all volume to its in-house exchange when the NFL season begins.
“At the end of the day, we’re going to offer the best possible NFL offering at kickoff, and we’ll make the decision between the two exchanges for what that is,” he said. “In terms of the best possible offering, though, the way we think about it is not necessarily what is everybody else doing, but what does a best-in-class NFL offering look like on a sportsbook. And that’s our benchmark. We’re not necessarily just copying the competition.”
Single DraftKings app
Rather than promoting its prediction market and sportsbook separately, DraftKings has mostly been marketing around a single “super app” that includes its sportsbook offering in sportsbook states and sports event contracts in states where those are available.
The aim is to make the betting and trading experiences feel similar, so the product is never too different from state to state.
“I can travel across the country,” Barber said. “I can experience the same sports experience that I’m used to. But underneath, we’re adhering to all of the regulatory compliance requirements for sports betting versus trading, depending on the state that you’re in.”
There are some limits to this. The CFTC as of Monday required prediction markets to stop displaying American-style odds, so DraftKings now shows percentages in non-sportsbook states.
“It feels like one experience, but under the hood, we handle it all separately with different regulatory requirements, different reporting requirements,” Barber said.
Unifying a prediction market and sportsbook doesn’t just mean making the former resemble the latter, though. Like BetMGM, DraftKings is incorporating into its sportsbook some elements familiar to prediction market users.
“You see price graphs pretty ubiquitously across predictions products, kind of the trending price of the bet or trade,” Barber said. “We’ve launched that now inside of the Super App, and when we launched it, it’s build once, deploy twice. It’s available to both products, and you can now see that in our sportsbook and in our predictions product.”
