DraftKings Declares Prediction Markets Entry, Finally Buys Railbird

• DraftKings is buying Railbird Exchange
• Company announces upcoming launch DraftKings Predictions
• Doesn’t mention sports event contracts

Ending several months of speculation, DraftKings (NASDAQ: DKNG) announced today it’s buying Railbird Technologies, the parent company of prediction markets firm Railbird Exchange. The sportsbook operator also said it plans to launch DraftKings Predictions in the coming months.

Financial terms of the Railbird deal, rumors of which surfaced in July, weren’t disclosed. Investors appear pleased by the news. After slumping over the past month amid news of soaring volumes on platforms like Kalshi, are higher by nearly 5% during Tuesday’s after-hours session.

The acquisition supports DraftKings’ broader strategy to enter prediction markets, expanding its addressable opportunity through regulated event contracts. Railbird’s team and proprietary technology establish a strategic foundation for the Company’s future growth in this space, enabling advantaged economics and long-term product differentiation,” according to a statement issued by the Boston-based gaming company.

It’s believed there wasn’t a bidding war for Railbird. Citizens Equity Research analyst Jordan Bender said the acquisition is of minimal risk for DraftKings because the buyer typically structures deals of this nature with small upfront costs and earn-outs over multi-year timeframes assuming certain financial objectives are met.

DraftKings Predictions Details

As noted above, DraftKings mentioned plans for the debut of an eponymous prediction markets platform set to rollout in the months ahead. That mobile application will “allow customers to trade regulated event contracts on real-world outcomes across finance, culture, and entertainment.”

Bender notes DraftKings could potentially use the launch of its prediction markets offering to enter states in which sports wagering currently isn’t legal or the legal states in which it currently doesn’t operate, such as Delaware.

“As a reminder, DraftKings has fantasy and Pick6 across 44 states, and will leverage its database and brand to cross-sell sports-minded customers to the prediction market platform at a more efficient rate compared to existing exchange Kalshi, in our view,” adds the analyst. “Said another way, the addressable market (in terms of U.S. population) for a ‘betting product’ doubled through this announcement.”

CME Could Be Involved, Too

In the press release, DraftKings said its prediction market will “will have the flexibility to connect to multiple exchanges.” Bender notes that could be a sign CME Group (NASDAQ: CME) will be involved, at least until Railbird technology is ready to move to be integrated with the upcoming DraftKings app.

Last week, reports surfaced indicating the owner of the Chicago Mercantile Exchange (CME) wants to offer sports event contracts by the end of the year.

Bender said that could be a “breadcrumb” pointing to DraftKings Predictions featuring sports-related contracts perhaps as soon as early 2026. That’s not a stretch because the platform “may expand into additional categories over time,” said DraftKings in the statement.