DraftKings Considering Buying Railbird Exchange Prediction Market
DraftKings is negotiating an acquisition with Railbird Exchange, an upstart prediction market platform. This further fuels the belief that the best sports betting sites and prediction markets will soon become intertwined.
Railbird Exchange has recently gained federal licensure, allowing users to buy and sell contracts that pay out based on the outcomes of real-world events. DraftKings had previously applied for this license, but withdrew its application in April.
The financial terms associated with the potential acquisition are still unknown, which isn’t all that surprising. The deal between the two companies hasn’t been finalized yet. DraftKings is known for its policy of staying silent on the specifics of particular discussions with its partners and other industry players.
Unlike the best sportsbooks, which are regulated by specific state laws, the prediction markets operate with federal licensing. This makes them available in states that don’t have legal sports betting, such as California and Texas.
Thus, by acquiring Railbird Exchange, DraftKings would gain a federally licensed foothold in the aforementioned states. This would allow residents of these states to participate in markets that closely resemble gambling, without violating state laws, and potentially exert pressure on legislators to revisit sports gambling laws down the line.
Former Senator announces support
Former Senator Blanche Lincoln, the architect of the Dodd-Frank Act and a former advocate against prediction markets, has announced her support for the very thing she had strongly opposed in the past.
In a written testimony to the Commodity Futures Trading Commission (CFTC), Lincoln warned that the state-level bans on prediction markets threaten the federal commodities regulation regime she helped establish.
Namely, the Dodd-Frank Act grants the CFTC exclusive authority to ban specific event contracts, and individual states shouldn’t have that right. However, her new position on the matter contradicts her earlier statements, in which she claimed that such event contracts lack any commercial value.
Despite questions about her interpretation of the very same laws she once championed, Lincoln’s testimony could still carry weight and be the driving force behind legalizing prediction markets in certain states.
FanDuel discussing Kalshi partnership
In other news, DraftKings’ competitor FanDuel is allegedly holding talks with Kalshi over a potential partnership. If the deal is finalized, it could grant the sportsbook access to prediction markets nationwide.
This could usher in a new era in the US betting industry, with FanDuel gaining a federally licensed foothold in the controversial prediction market that isn’t subject to state laws. It would also enable FanDuel to bypass state-specific taxation and restrictions, gaining entry into massive markets where sports betting remains illegal or restricted.
