DraftKings is preparing to make a major expansion beyond its traditional sportsbook operations with the introduction of a new platform called DraftKings Predictions, which will allow users to trade on the outcomes of sports events. The company confirmed that the product will debut “in the coming months,” signaling an ambitious move into the emerging prediction markets sector—one that could test the limits of existing state gaming laws.

The announcement was included in DraftKings’ third-quarter 2025 earnings report, where CEO and Co-founder Jason Robins described his optimism about the company’s direction. “This is the most bullish I have ever felt about our future,” Robins said. “Underlying growth in the business is accelerating and we are excited to launch DraftKings Predictions in the coming months, which we view as a significant incremental opportunity.”

The move follows DraftKings’ October acquisition of Railbird Technologies Inc., a federally licensed exchange recognized by the Commodity Futures Trading Commission (CFTC). This purchase gives DraftKings a regulatory foundation for operating in the predictions space, allowing it to offer contracts based on future sporting events.

Unlike its traditional sportsbook—which operates under state-level gambling laws—DraftKings Predictions will focus on states where sports betting has yet to be legalized. In a shareholder letter, the company stated it intends to prioritize “the roughly two-dozen states” without active DraftKings Sportsbook operations, including major markets such as California, Texas, and Florida, which collectively account for about a quarter of the U.S. population.

Regulatory Resistance and Legal Challenges

While DraftKings’ new venture could open vast new markets, it also raises significant regulatory questions. Multiple state gaming authorities have cautioned licensed operators against participating in prediction markets, suggesting such activities could violate state gambling statutes.

In Michigan, for instance, the Michigan Gaming Control Board (MGCB) warned operators that facilitating prediction markets could affect future licensing decisions. “The Michigan Gaming Control Board understands that certain licensees may be considering opportunities to operate, offer, or facilitate access to prediction markets,” wrote Henry Williams, the MGCB’s Executive Director. He emphasized that many of these offerings “would not operate in accordance with state gaming laws or pursuant to state-issued gaming licenses.”

Similarly, the Ohio Casino Control Commission issued letters discouraging involvement in sports event contracts, prompting prediction market operator Kalshi to sue both the commission and the state’s attorney general. Regulators in Arizona and Nevada have released comparable advisories.

Legal experts believe these disputes could eventually reach the U.S. Supreme Court, as prediction market operators—including Kalshi and Polymarket—argue that their products function as federally legal commodities exchanges rather than state-regulated gambling activities.

Business Growth and Strategic Focus

Despite the potential legal headwinds, DraftKings remains confident in its growth trajectory. The company reported $1.144 billion in revenue for the third quarter of 2025—a 4% increase year-over-year—driven by strong customer retention, improved sportsbook hold percentages, and expanded iGaming activity.

CFO Alan Ellingson highlighted the company’s focus on maximizing shareholder value, announcing that the board had doubled its share repurchase program from $1 billion to $2 billion. DraftKings’ Monthly Unique Payers (MUPs) rose to 3.6 million, marking a 2% increase from the previous year, while Average Revenue per MUP (ARPMUP) climbed to $106.

DraftKings is now operational in 25 states, Washington, D.C., and Ontario, Canada, covering roughly half of the U.S. population. The company expects to add Missouri later this year, pending regulatory approval.

Expanding Through Partnerships

In addition to its predictions market initiative, DraftKings announced a new comprehensive partnership with ESPN, making it the official sportsbook and odds provider for the sports media giant. Under the agreement, DraftKings’ betting products will be integrated across ESPN’s platforms beginning in December, with a full rollout expected by 2026.

“Our betting approach has focused on offering an integrated experience within our products,” said Jimmy Pitaro, Chairman of ESPN. “Working with DraftKings, a leader in the space, will allow us to build upon that foundation, continue to super-serve passionate sports fans and grow our ESPN direct-to-consumer business. We are excited about this new collaboration with DraftKings.”

Through the ESPN integration, DraftKings will power a dedicated betting tab in the ESPN app and offer exclusive promotions tied to ESPN Unlimited, the network’s direct-to-consumer subscription service.