DraftKings Potentially Eyeing Election Betting Opportunities?

• DraftKings CEO Jason Robins said the company may look at offering betting markets on future U.S. elections
• Election betting is regulated differently than sports betting in the U.S.
• DraftKings will have to weigh opportunity versus the effort to do so

DraftKings CEO Jason Robins discussed the company’s Q3 2024 results this morning and noted the sports betting company may be interested in getting into a new form betting.

Robins said the company will likely explore the opportunity to offer “trading event contracts” on presidential elections, such as Kalshi and ForecastEx, which saw millions of “bets” on the recent presidential election.

“I think it’s a very interesting thing. The dominant market within that is election markets, of course, and particularly during presidential elections. So, I know there’s a lot of attention on it over the last few weeks,” Robins said during the earnings call.

Not Same as Sports Betting

The mechanism of wagering on president outcomes, which is typically labeled as “trading event contracts,” is quite different than how sports bets are regulated. Sports betting is regulated by state gaming regulators and commissions, while the prediction markets are regulated by the Commodity Futures Trading Commission.

“It is a different framework. It’s not licensed as a betting product, it’s licensed as a financial market,” Robins said.

Companies such as Kalshi will offer “contracts” to users, with prices for each contract reflecting demand from traders. Each prediction market contract matches a buyer and seller for each bet, while prices of the contracts fluctuate based on trading activity and market valuations.

These types of markets have come under federal scrutiny as of late, as federal regulators last year tried to bar users from taking contracts on elections. However, a U.S. appeals court in October allowed trading to resume on the presidential election.

It’s a massive potential market, with Kalshi noting on X that it did more than $1 billion in trading volume for the election.

“So, definitely something we’re looking at in advance of next presidential election and potentially there will be an opportunity to look at something sooner,” Robins said.

DraftKings Eyeing New States

Robins also touched on states DraftKings will focus on in the next several years that have a chance at legalizing sports betting. He directly mentioned Minnesota, Texas, and Georgia as states that have come close in recent years that will likely try again in 2025.

He also said it was encouraging that the Seminole Tribe seemed interested in potential partnerships with outside sports betting companies. The Seminole’s have sports betting exclusivity in Florida for the next three decades, but have recently expressed interest in outside deals.

Hard Rock CEO Jim Allen recently told CNBC the tribe would be open to new relationships.

“We do recognize that long term, some type of strategic relationship with some of the brands that really have marquee value could be helpful to both of us, and we are receptive to those conversations,” he said.

A path to one of the largest markets in the country is an exciting opportunity, Robins said.

“Very encouraged to hear those comments. We really have a ton of respect for Hard Rock and for the Seminoles and Jim Allen has done a fantastic job and enjoyed spending time and getting to know him and his team. So, we’ll see how that all plays out. Obviously, Florida is a big state and something that we’d be very excited if there were a path to be able to offer our product to customers there,” he said.