DraftKings Withdraws Application to Enter Prediction Market Space

In a surprise twist in the shifting prediction markets landscape, DraftKings Inc. has withdrawn its application to become a member of the National Futures Association (NFA), halting, or at least delaying, the company’s planned entry into the rapidly growing sports-based event contract space. This move comes just days before the highly anticipated Commodity Futures Trading Commission (CFTC) roundtable on prediction markets.

DraftKings Appears to Be Hedging Its Bets

The withdrawal happened mere days after news broke out that related company DraftKings Predict was listed as a “pending” NFA member. The news stirred widespread speculation about DraftKings’ plans to launch its own federally regulated prediction market. Such a move could have given the company access to all 50 states, bypassing state-level sports betting regulations.

However, a recent Covers report revealed that DraftKings’ listing had disappeared from the official NFA page. Despite past interest from CEO Jason Robins, the company seems cautious. With no active NFA membership, DraftKings Predict has likely dialed back its ambitions to enter the CFTC-supervised prediction markets. For now, at least.

“DraftKings continues to monitor prediction market developments as an emerging product that reflects evolving consumer engagement and warrants thoughtful consideration.”

DraftKings statement

The motives behind DraftKings’ initial application and its sudden withdrawal remain unclear. NFA membership is not strictly required to offer prediction market services, as evidenced by companies like Kalshi, which still adheres to the CFTC’s framework. However, many high-profile platforms like Robinhood and Crypto.com have opted in, suggesting that NFA membership could offer strategic advantages.

Prediction Markets Face Rising Uncertainty

DraftKings’ sudden pivot comes just weeks ahead of the CFTC’s April 30 roundtable on prediction markets. This highly anticipated event should help gain a better understanding of the legal gray area these platforms currently occupy. The debate primarily focuses on whether sports prediction contracts are subject to federal oversight or whether they constitute a form of gambling that should stay under state regulation.

Many stakeholders, from tribal gaming groups to state regulators, argue that the sports prediction market should fall under the same legal framework as mainstream sports wagering. Gambling industry representatives fear an unchecked prediction market could undermine local sports betting laws, siphon off tax revenue, and erode consumer protections.

For now, DraftKings will likely remain on the side of state-regulated sports betting, the business it knows best. However, the intrigue surrounding its interest in prediction markets remains. As the CFTC roundtable draws near, the future of USA prediction markets and DraftKings’ potential role in them remains a compelling chapter in the broader narrative of US gambling innovation.