According to Jason Robins, some prediction markets are “irresponsibly saying” that their product is significantly different than other kinds of sports betting. The DraftKings CEO added that exchanges have to think about how to “protect the ecosystem” in a world where “experts” often make up one side of the market.
Robins was speaking Friday morning on DraftKings’ first-quarter earnings call that followed the sports betting giant’s reporting of its earnings Thursday afternoon.
8c81ac92-2c7e-4bed-ac91-ccf32107567cSome prediction markets misleading customers?
Robins was asked about a note in DraftKings’ results, which said, “Early third-party data suggests that Predictions customers are experiencing losses more quickly than Sportsbook customers, reinforcing the importance of trust, consumer protections, and operator discipline.”
He said that in his view, this was due in part to some leading prediction markets denying the similarities between how their products work and sportsbooks.
In particular, he said that some businesses in the space were potentially misleading customers about the nature of the parties on the other side of their bets and allowing customers to believe that they were betting against users similar to themselves, instead of sophisticated market makers with much better resources at their disposal than the typical prediction market traders.
“I think part of it is that predictions operators, some of them anyway, are sort of irresponsibly saying that this is not the same as a product like ours, because you have people playing against each other on prediction markets, when the reality is that most of the money that is being put up is being put up by professional market makers, institutions, things like that,” he said. “I think some people don’t necessarily understand that, and as that becomes more apparent, I think you’ll start to see that moderate.”
DFS parallels
Robins added that it was important that the recreational prediction market users both fully understand the product and have reason to come back, saying he saw a similar version of this phenomenon with DraftKings’ daily fantasy sports product.
“We saw this in fantasy sports,” he said. “When you have a peer-to-peer setup, you’re going to have people on one side that are experts, and you’ve got to make sure you protect the ecosystem as best as you can, within the rules and regulations.
“Doing things to make sure that you’re building a healthy ecosystem was critical to us building out a sustainable daily fantasy sports product. Right now, I don’t see that necessarily happening with some of our predictions competitors.”
“As time goes on, hopefully we’ll set the standard there and it’ll be something that really becomes an important part of managing the ecosystem.”
In 2016, close to the peak of DFS mania, DraftKings began making efforts to limit the participation of the sharpest players in certain contests. It introduced beginner-only contests for those who have played fewer than 50 times and casual contests that excluded the most “accomplished players.”
Leading U.K.-based betting exchange Betfair, which has essentially the same core format as a prediction market, in 2008 introduced a “premium charge” — an additional fee for consistent winners — and later replaced it with a similar concept called the “expert fee.” It is not clear whether DraftKings would take similar steps on its prediction market.
DraftKings is market making
For certain bets, those market makers include DraftKings itself. As first reported by InGame, the operator launched its own market-making operation in the first quarter, which is already profitable, Robins said. He added that the market-making arm of the operation had been among the fastest new products to turn a profit that he had seen at DraftKings.
Robins said that given DraftKings’ sportsbook pricing, there is no reason why it shouldn’t be one of the most successful market makers in the world.
“I think even beyond hedging, there’s probably arbitrage moments and ways to just increase value,” he said. “That’s something we’re definitely looking at. Our market makers stood up in the last couple months. So far so good. We’re making money. It’s one of our fastest-to-profitability business lines we’ve ever launched, so we’re really excited about that. And we think there’s a lot of opportunity to scale it.
“We should theoretically have one of the top two or three market makers in the world, arguably the best, given our modeling capabilities. I don’t see, at least on the sports front, how anyone is going to be able to match that outside of maybe one or two of our big sportsbook competitors that also have really strong pricing models internally.”
DK beating FanDuel at prediction markets
DraftKings reported early figures on its prediction market performance. The business said annualized “consumer volume” from prediction markets exceeded $1 billion, up 38% from March. In addition, annualized total volume traded for the month exceeded $2.3 billion, a rise of 43% from March.
Consumer volume strips out market makers to present a figure that is closer to sportsbook handle, though the two are still not a perfect like-for-like.
That would mean that the business processed around $85 million in “consumer volume,” or a little over $190 million in total volume, in April. In March, these figures were roughly $62 million and $134 million, respectively.
Those numbers put DraftKings well ahead of longtime rival FanDuel in prediction markets. FanDuel currently only offers access to contracts on CME — though it has plans to change that. CME typically reports around $1.5 million per day in volume, so even if all of that was from FanDuel, DraftKings would still be well ahead.
Railbird launch coming soon
DraftKings currently offers its users access to contracts traded on CME and Crypto.com. It also plans to launch its own exchange, after buying CFTC-registered exchange Railbird last year.
That launch could allow for more flexibility in the products DraftKings offers and a more favorable fee structure. DraftKings currently charges a flat one-cent fee for all prediction market contracts on top of the exchange’s fees, which for CME and Crypto.com are usually a flat one cent per contract as well. Under this format, fees for bets on longshots can be an extremely high percentage of the stake, and fees for bets on big favorites can be an extremely high percentage of the potential winnings.
Robins said that Railbird should be launching in the “coming weeks.” That would seemingly put its launch date at a similar point to Robinhood’s new exchange Rothera.
He said that if you exclude customer acquisition costs, the Railbird exchange “should be something that is profitable pretty quickly.”
Robins added that DraftKings also planned to launch combos — or parlays — in the coming weeks.
‘Super app’ helping with spending
Customer acquisition costs for prediction market users have fallen dramatically, Robins said, by 80% in April, thanks mostly to the launch of a unified DraftKings “super app” that includes sportsbook, casino, fantasy, and prediction markets all in one place in states where they are available.
Robins plans to ramp up marketing spend around prediction markets, given that it is generating strong returns.
“It’s scaling actually a little faster than we thought,” he said. “At this point, we are thinking we’re gonna probably invest about $200 million-$300 million all in on predictions this year.
“A lot of that will be marketing, some of that will be product and technology investment as well.”
Strong results overall
The comments came as DraftKings reported strong results for the quarter. Revenue hit $1.65 billion, up 16.9% year-on-year, with sportsbook revenue rising 24% to $1.09 billion. The strong sportsbook growth comes in contrast to FanDuel, which saw its growth mostly coming from iGaming while sports betting growth was slow.
Adjusted earnings before interest, tax, depreciation and amortization was $167.9 million, up 63.5% year-on-year. Robins said the company had reached a profitability “inflection point,” which would allow it to invest more in becoming a leader in prediction markets.
The business made a net profit of $21.1 million, after a $33.9 million loss in the first quarter of 2025. It is the first time that DraftKings has made a profit during the first three months of any year.
Shares rise, but still well below last August
DraftKings shares rose by as much as 7.7% soon after markets opened to $27.17, before settling at more modest gains. As of 12 p.m. ET Friday, the shares were up 2.8% at $25.92.
That leaves the business valued at $12.82 billion.
The shares are up 25.6% since the lows reached in late March, but are still trading at around half the value they held at the end of August. Between September and March, the business faced a dramatic sell-off, mostly due to the rise of prediction markets.
