The app, DraftKings Predictions, will be available in 38 states, with sports trading allowed in 17 of them|World Poker Tour|CC BY-ND 2.0

DraftKings is launching a new app that lets users trade contracts on sports and financial events, moving beyond traditional sports betting and becoming the latest to enter the prediction market.

The app, called DraftKings Predictions, will be available in 38 states; sports contracts will be available in 17 of those. The company plans to offer sports in major states where online gambling is not yet legal—among them California, Texas, and Georgia.

The app focuses on prediction markets, where users trade on the outcome of events rather than place standard bets. 

These markets fall under federal oversight by the Commodity Futures Trading Commission (CFTC), not state gambling regulators. That difference places them in a legal gray area and has raised concerns among gaming authorities.

To avoid regulatory problems, DraftKings will not offer sports contracts in states where it already runs sportsbooks.

At launch, customer trades will go through a federally regulated exchange backed by CME Group. DraftKings plans to shift trading later to Railbird Technologies, a regulated exchange it acquired in October.

Recently, Coinbase said it will soon add stock trading and Kalshi’s prediction markets to its app, while Robinhood has rolled out NFL prediction wagers after introducing event contracts last year. Meanwhile, Fanatics has partnered with Crypto.com to launch a prediction market, and FanDuel plans to debut its own prediction market app by this month’s end.

Some states have ordered rival prediction platforms to stop offering sports contracts, and others have warned sportsbooks against entering the space. Still, DraftKings says prediction markets have not hurt its betting business.

Instead, the company sees them as a way to grow in states where sports betting is unavailable. Investor confidence has improved, with the stock up about 25% from early November lows.

Prediction market is rapidly gaining popularity. Kalshi and Polymarket have seen monthly bets rise from under $100 million in early 2024 to more than $13 billion in November.