It’s been less than a week since DraftKings launched its prediction product and only 48 hours since FanDuel did the same, but Citizens financial analyst Jordan Bender wrote in an industry note Tuesday that both are off to strong starts. In addition, their entrance into the market seems to dovetail with a more “aggressive” marking effort from Kalshi.
In the first four days that DraftKings Predictions was live, Bender wrote that there were 34,000 downloads, “which we view as a solid start.” DraftKings Predictions went live Friday in 38 markets with sports event contracts live in 15 of those. FanDuel’s launch was more limited — five states with more to follow — and sports event contracts are available in those first five. Both companies launched in partnership with derivatives exchange CME, which was a bit of a surprise as DraftKings in October acquired Railbird, a designated contracts market (DCM) licensee with the Commodity Futures Trading Commission (CFTC).
Barry Jonas of Truist wrote in an industry note Friday that the expectation is that DraftKings plans to expand its offerings via “multiple exchanges,” including Railbird.
“We acquired Railbird in October and we are actively working to launch it in the near future,” DraftKings SVP for Predictions Jeanine Hightower-Sellitto told InGame. “Launching an exchange is not a trivial experience, but we’re working to bring it live.”
FanDuel appears to plan to work exclusively with CME, at least to start.
Stock prices for both companies were little changed on launch day, suggesting that Wall Street had already priced in the launches. DraftKings closed at $34.15 Thursday and spiked on opening Friday to $34.84, before settling at $33.94 at the end of the trading day. FanDuel opened at $221.81 Monday morning, and got as high as $224.96 before closing at $223.97.
While multiple state sports betting regulators have told licensees that offering prediction markets could result in sanctions, up to license revocation, Jonas wrote that both companies “appear comfortable proceeding without putting their core state gaming licenses at risks. With multiple court cases outstanding, we likely haven’t heard the last on the matter- with a Supreme Court showdown likely, in our view.”
California, Texas the prizes
DraftKings and FanDuel, the sportsbook market leaders, are the 11th and 12th platforms to offer prediction markets, per Citizens, and followed Fanatics Markets, the first traditional sportsbook to enter the space.
All three companies say they won’t offer prediction markets in states that have legalized sports wagering, and ultimately will be vying to build databases in markets where wagering is not yet legal. In particular, stakeholders expect all three companies to make major marketing pushes in California and Texas when they enter those markets. Combined, California and Texas represent about 20% of the U.S. population.
It’s highly unlikely that either state will legalize sports betting in the next 12 months — California’s tribes control gambling in the state and have no plans for a voter initiative, and Texas’ legislature won’t meet again until 2027. DraftKings Predictions and Fanatics Markets are already live in both states.
Kalshi on TikTok, game apps, more
Interestingly, all three companies are offering sports event contracts in Florida, where the Seminole Tribe has a monopoly on all forms of gaming. The tribe, through its Hard Rock Bet platform, offers statewide mobile sports betting. In addition, Fanatics Markets is available in Delaware, Maine, New Hampshire, Oregon, and Rhode Island — all small markets that do have live online sports betting. None of the companies are offering sports event contracts in jurisdictions in which they are licensed.
Alongside the newest prediction offerings, Kalshi, the company that brought sports event markets to the fore, has begun to expand its markets to new social media platforms, including TikTok, Bender wrote in the Citizens note. The company’s advertisements are also showing up more frequently on sponsored game apps, and on other social media platforms. Kalshi is partnered with the NHL, and has a separate partnership with the Chicago Blackhawks, which it has begun to leverage.
Per Citizens, Kalshi was downloaded more than 300,000 last week, the third consecutive week that has happened.
