DraftKings has received approval from the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC) to act as an introducing broker (IB) — seemingly bringing it one step closer to launching its own prediction market platform.
The approval of DraftKings’ IB application — under the name Gus III LLC — was indicated on the NFA website.
In the world of CFTC-registered event contracts, an IB offers customers access to contracts made by a designated contract market (DCM). An IB does not technically handle customer funds, though this is not always noticeable to the end user.
“DraftKings has been approved as a registered Introducing Broker with the U.S. Commodity Futures Trading Commission and a Member of the National Futures Association under its wholly-owned subsidiary Gus III LLC (d/b/a DraftKings Predictions),” a spokesperson confirmed to InGame in a statement. “This registration marks an important step in the Company’s federally regulated operations and supports the upcoming launch of DraftKings Predictions.
“We appreciate the NFA’s diligence in the process and remain committed to operating responsibly, transparently, and in full compliance with federal regulation.”
In November, DraftKings announced that it would launch its prediction market, including sports event contracts, “in many states” in the “coming months.”
DraftKings already owns DCM
DraftKings owns Railbird, which was approved as a DCM earlier this year but has not yet launched. As a DCM — the same status that Kalshi holds — Railbird can make its own contracts. It bought the exchange in October. As a result, the company may have been able to do business without being an approved IB, but the approval may allow for more options in how it can offer those contracts to customers.
An IB has greater freedom than a DCM in how it can market itself, as companies that “solicit” orders must either be an IB or a futures commission merchant (FCM).
In addition, IB status would allow DraftKings to offer contracts from exchanges other than Railbird if it chooses to do so. When the company first announced the launch of a prediction market in October, it noted that “the product will have the flexibility to connect to multiple exchanges.” That means DraftKings Predictions may also feature contracts from a different CFTC-registered prediction market, such as Kalshi.
Registration of IBs — as well as FCMs like Robinhood — is mostly handled by the NFA, a trade body for the commodity futures industry. The CFTC then registers NFA-approved firms within days of approval.
NFA approval has been slow
A number of companies involved in sportsbooks or daily fantasy sports (DFS) have aimed to get NFA approval, but the process appears to have been slow for many.
DraftKings’ application took almost six months, having been filed in June. The NFA website notes that applications may take “six weeks or longer” to be approved.
The application was DraftKings’ second attempt. It filed under the name Gus II LLC in July 2024, but withdrew its application in March before filing the new application three months later.
Before DraftKings, PrizePicks was the only company in the sportsbook/DFS space to be approved in the conventional way, winning FCM status in September. Fanatics is also an IB, but gained this status by buying an already approved company named Paragon Global Markets rather than waiting for approval.
FanDuel, which is set to launch its own prediction market platform with sports event contracts this month, is partnered with commodities giant CME, which is already approved as an FCM.
Fantasy platform Sleeper applied for NFA approval in May, then after four months without approval it sued the CFTC, alleging the regulator had stepped in to block an application that the NFA was ready to sanction. Fantasy platform Splash and Jake Paul-backed sportsbook Betr also have pending applications, filed in August and October, respectively.
Is DraftKings at odds with regulators over predictions?
DraftKings’ plans to offer sports event contracts risk putting it at odds with gaming regulators, which generally believe that the contracts are an unlicensed form of sports betting.
DraftKings plans to only offer its contracts in states where its sportsbook is not available.
Some states have warned licensees that even offering sports event contracts in another state could be grounds to revoke a license. However, CEO Jason Robins has said that the company’s conversations with regulators have led it to believe its prediction market strategy will not put its sportsbook operating licenses at risk.
DraftKings withdrew an application for a license in Nevada days after announcing plans to offer sports contracts.
DraftKings, as did FanDuel, left the trade body American Gaming Association last month. The AGA, whose members are mostly casino operators, has been opposed to prediction markets.
