DraftKings is reportedly in talks to acquire Railbird, a recently licensed federally regulated prediction market exchange.
No deal has been finalized, and financial terms have not been disclosed, according to a report from Front Office Sports.
The potential acquisition comes as DraftKings and other major sportsbooks look to alternatives for growth ahead of football season, particularly in states where sports betting remains illegal. It also arrives at a time when the line between sports betting and event contract trading is becoming increasingly blurred and contentious.
CFTC OKs latest predictions company
Founded in 2021 by former Point72 analysts Miles Saffran and Edward Tian, Railbird received approval from the Commodity Futures Trading Commission last month to operate as a “Designated Contract Market”. That license positions it as one of the few federally regulated prediction markets in the country.
Prediction market exchanges allow users to buy and sell contracts based on the outcomes of real-world events, including political races, economic data, weather and, most recently, sports. Railbird says it intends to operate in all 50 states and has backing from investors including the CEO of SeatGeek as well as several venture capital firms.
DraftKings did not confirm or deny the talks.
“DraftKings speaks to a variety of companies regarding various matters in the normal course of business, and it is our general policy not to comment on the specifics of any of those discussions,” a DraftKings spokesperson said in a statement.
A prediction pivot for DraftKings?
Earlier this year, DraftKings filed paperwork with the National Futures Association to launch its own federally regulated prediction market, “DraftKings Predict.” That application was withdrawn in April.
At the time, the company said it would continue to monitor the space as “an emerging product that reflects evolving consumer engagement.”
Should it acquire Railbird, DraftKings would be taking a different route into the federally regulated prediction market business. Unlike traditional sportsbooks, which are licensed on a state-by-state basis, federally regulated exchanges have been able to operate in states without legalized sports betting, such as Texas and California.
That potential access has drawn increasing attention from operators. Flutter CEO Peter Jackson, whose company owns FanDuel, said during recent earnings year that prediction markets could provide a “prime-the-pump opportunity” in unregulated states.
Prediction business is booming
Kalshi recently raised $185 million at a $2 billion valuation, with plans to offer over 4,500 markets by year’s end. The funding round came just six months after launching its first sports contracts in January. Today, sports account for 50 of its 51 most-traded markets.
CEO Tarek Mansour has indicated new investments will be used to expand sports and add more distribution partners to a list that already includes broker exchange Robinhood.
That growth, however, has drawn scrutiny. At least seven states, including Nevada and New Jersey, have issued cease-and-desist orders, arguing that Kalshi is operating as an unlicensed sportsbook. Kalshi has responded with lawsuits and has secured temporary court victories in multiple states, allowing it to remain active while litigation continues.
Railbird is not yet live and has not publicly announced a launch date. In a June press release announcing its CFTC license, the company described its mission as bringing capital markets tools to everyday news and societal trends.
