Sports Betting Giant Ventures Into Crypto Predictions Market

DraftKings acquired Railbird, a CFTC-licensed exchange, to build its own prediction market. Polymarket is apparently partnering to operate as the clearinghouse of this new service.

So far, this announcement hasn’t caused much friction between traditional gambling and risky Web3 betting. Still, experts are raising concerns about dangerous fallout for the economy and society itself.

DraftKings to Launch Prediction Market

Prediction markets like Kalshi and Polymarket have had a lot of recent success moving into the world of sports gambling, and other Web3 firms like Robinhood have been doing the same. It’s only natural, then, that the process would happen in reverse, as DraftKings is launching a prediction market.

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DraftKings, a popular sports gambling app, was exploring Web3 four years ago, so a prediction market seems like a logical next step.

According to the firm’s press release, it acquired Railbird, a CFTC-licensed exchange, to make it happen. Railbird’s team and infrastructure will help get this new market operational.

Polymarket Salutes New Deal

At first glance, it seems like established Web3-native prediction markets might disapprove of DraftKings’ new play, especially because sports gambling is so lucrative. However, this sector is already a proving ground for interactions between TradFi and crypto.

Moreover, this new expansion comes with at least one explicit partnership. Shayne Coplan, CEO of Polymarket, praised the Railbird deal, claiming that his own company will serve as DraftKings’ clearinghouse for its new prediction market:

Plus, Polymarket has been expanding recently, with massive institutional inflows powering new product offerings in several areas. The prediction market doesn’t have a strong reason to begrudge DraftKings’ own expansion, especially since Polymarket itself will directly benefit.

Possible Downstream Consequences

Still, though, DraftKings may only intensify concerns that prediction markets are dangerous for finance. Tech journalist Jason Mikula called the Railbird deal a “convergence between finance/investing and literal gambling,” warning of possible danger.

As the line between institutional investments and legalized sports betting gets blurrier and blurrier, countless new problems could arise. Even if rampant speculation doesn’t fuel a financial implosion, which is very plausible, gambling is extremely addictive and dangerous.

In other words, the continued entry of gambling into the TradFi economy could be problematic in its own right. As these platforms become increasingly normalized, ordinary fans will find it easier and easier to bankrupt themselves.