DraftKings went live with its proprietary prediction markets exchange, DKeX, marking the company’s latest step into the fast-growing predictions business.
Friday‘s launch gives DraftKings its own exchange infrastructure rather than relying only on third-party partners, and it builds on the company’s earlier move into prediction markets through DraftKings Predictions and its Railbird acquisition. The company filed for its contracts in May.
DraftKings said the new exchange is designed to bolster a “differentiated predictions experience” while reporting growing annualized volume numbers.
Robins touts progress potential with DKeX
DKeX’s launch means DraftKings can move faster with enhancements, CEO Jason Robins said in the release.
“DraftKings is at its best when building innovative platforms that bring together technology, customer focus, and world-class execution to shape the future of sports engagement,” Robins said. “The momentum we’ve seen on DraftKings Predictions in recent months reflects the significant progress we’ve made in delivering a more seamless and connected experience for sports fans.
“DKeX provides a vertically integrated foundation for DraftKings Predictions, strengthening our prediction markets content and capabilities, giving us greater control over the technology that powers those offerings, and enabling us to move faster as we continue enhancing our unified app.”
DraftKings said DKeX is now its proprietary prediction markets exchange, with integrated access through the company’s predictions product. The launch follows months of preparation after DraftKings acquired Railbird and its Commodity Futures Trading Commission-registered exchange infrastructure last year.
The company has already been positioning its predictions product, available in 18 states, as part of a broader move into event contracts to pursue growth in states where traditional mobile sports betting is unavailable.
Annual forecast based on weekly stats
According to DraftKings, its prediction product has $3.4 billion in annualized consumer volume and approximately $11.3 billion in annualized total trading volume for the week ended June 21.
Both numbers are up from previously reported numbers, but those were based off the full month of May. DraftKings reported $1.3 billion in annualized consumer volume and $3.1 billion in annualized total trading volume earlier in June based on May’s results, which had grown 24% and 34%, respectively, over April.
The new annualized total trading volume is ~$940 million monthly, up from $260 million based on May’s results. That nearly $1 billion is still a far cry from Kalshi, which had turnover of $17.9 billion in May, according to LSR Data Analyst Eric Ramsey.
Customers picking up parlays combos
Robins attributed the growth to platform enhancements, interest in the World Cup and the “growing adoption” of new contracts and features including combinations.
“Since launching in mid-May, more than 30% of customers have used combinations, which allow multiple individual contracts to be bundled into a single position, highlighting strong demand for a customizable, sports-first prediction markets experience,” Robins said.
Why DKeX matters for DraftKings
A proprietary exchange gives DraftKings more control over pricing, product design and long-term economics than simply routing through someone else’s platform.
Its initial predictions app used the CME Group exchange.
DKeX also puts the company in a stronger position to build out features that look more like a prediction market product instead of a repackaged sportsbook offering.
“The pace of development across Predictions has been substantial, from expanding our event contract offerings to introducing key features like combos, which customers have quickly embraced,” said Jeanine Hightower-Sellitto, senior VP and general manager of prediction markets, said in the release. “DKeX is the latest milestone in that progression and creates new opportunities to further expand the offering ahead of some of the biggest moments on the sports calendar.”
