DraftKings CEO: Prediction Markets May Push States to Reconsider Sports Betting Legalization

• DraftKings CEO Jason Robins shared an interesting viewpoint on prediction markets during company’s Q1 earnings call
• The growing U.S. prediction markets may actually serve as a catalyst for further sports betting legalization
• State regulators, or state tribes, may want to legalize on their own terms instead of being subjected to prediction markets

The growth, or even just the threat, of U.S. prediction markets may serve as a push for states to consider legalizing sports betting, DraftKings CEO Jason Robins said during today’s Q1 earnings call.

As questions still abound about sports prediction markets, and who regulates the markets, Robins said it may drive states to reconsider legalized sports betting and control their markets under their own terms.

“It’s definitely something that they’re (states) talking about, and it’s early days so hard to say at this point that it’s catalyzed anything. We haven’t seen any states say, yeah, we’re going to do this now. Definitely, though, I think step one is getting their attention to start having those conversations, and we’re seeing that happen,” he said.

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Power Over Sports Betting Markets

As more companies consider jumping into the prediction markets, and their popular sports event prediction offerings, state lawmakers may have more of a desire now to control their own sports betting markets, Robins said.

Prediction market brokerages believe the federal government – specifically the Commodity Futures Trading Commission – is the only regulatory body with the power to oversee their services. State gaming regulators believe they should have a say in what is offered in their boundaries, and a legal battle is currently ongoing in several states to make this determination.

As the struggle unfolds, Robins said it makes sense for states, and state tribes, to consider sports betting legalization to have power over their own markets.

“As the markets continue to grow, that’s going to be a powerful lever. This is happening whether you want this to or not. Do you want to do this in way that makes sense, whether you’re a California tribe or a state that hasn’t legalized yet, that allows you to prosper? Or do you want to watch it happen somewhere else? I think that’s something everyone is talking about now,” he said.

While Robins did not comment on the possibility of DraftKings entering the prediction markets, several other operators are exploring the option.

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FanDuel, PENN Potentially Exploring Prediction Markets

Both FanDuel and PENN Entertainment representatives revealed this week during earning calls that interest existed in the prediction markets.

FanDuel CEO Peter Jackson said the company is “closely monitoring” the actions surrounding the U.S. event prediction market and could bring its European betting exchange, Betfair, to the U.S.

“It’s worth reminding, we do operate the world’s largest sports betting exchange. We know this space well. The Betfair Exchange has for many years given us very good insights in terms of how this stuff can play out,” he said.

PENN Entertainment CEO Jay Snowden also confirmed during the company’s earning call that it will monitor the U.S. prediction market for potential opportunities. Snowden commented on the opportunity this morning during PENN Entertainment’s Q1 earnings call, noting that the U.S. prediction market is a “niche” market that likely only providing incremental value in states where legalized online sports betting, such as ESPN BET, does not exist.

However, he did confirm that if the opportunity to enter the market becomes available, PENN Entertainment will participate.