How I Made $5000 in the Stock Market

DraftKings Stock Has Been Getting Destroyed by Prediction Markets. It’s Finally Fighting Back.

Oct 22, 2025 08:06:00 -0400 by Nate Wolf | #Consumer

DraftKings plans to launch DraftKings Predictions in the coming months, the company said. (Scott Eisen/Getty Images for DraftKings)

Key Points

DraftKings has acquired Railbird Technologies and its licensed futures exchange Railbird Exchange as the sports-betting company dips its toes into prediction markets.

The company also confirmed plans after the stock market closed Tuesday to launch DraftKings Predictions, a mobile application for trading event contracts. The app will debut in the coming months, the company said.

Unlike traditional betting, in which customers gamble against bookmakers, prediction markets allow users to trade event contracts among themselves. On federally regulated exchanges like Kalshi, bettors can wager on everything from election results to Oscar nominations.

Kalshi has made a concerted push into sports this year, recently reporting a record volume of trading during NFL and college football season. The encroachment from prediction markets poses a threat to traditional sportsbooks, which are governed in accordance with state gambling laws. That dynamic made DraftKings’ move all but inevitable.

DraftKings Predictions will allow customers to trade event contracts related to finance, culture, and entertainment, but not sports. However, the company said it “may expand into additional categories over time.” The company likely is trying to avoid a regulatory crackdown from states where it is recognized as a legal sportsbook.

“We believe the language surrounding the offering is somewhat vague, leaving the door open to sports,” wrote Mizuho Securities analyst Ben Chaiken in a research note. The firm reiterated an Outperform rating and a $54 price target for the stock.

Overall, Wall Street appeared cautiously optimistic DraftKings could fend off competition from Kalshi and other prediction markets. Other shoes will need to drop following Tuesday’s announcement, however.

Shares rose 3.9% to $34.93 in premarket trading Wednesday. That’s a solid return, but it doesn’t come close to clawing back the losses DraftKings has suffered since prediction market fears began heating up this fall. As of Tuesday’s close, the stock has dropped 30% since the beginning of September.

“We view the acquisition as both defensive and offensive,” wrote Mike Hickey of Benchmark. “Defensive in preserving DraftKings’ relevance amid evolving federal oversight, and offensive in enabling participation in a rapidly expanding market adjacent to sports betting.”

Crucially, both Mizuho and Benchmark argued DraftKings Predictions could open up new opportunities in Texas and California, where online sports gambling isn’t legal. The rise of prediction markets could incentivize those states and others to legalize betting and claim tax revenue from it, which would be a boon for DraftKings, Hickey said.

Benchmark maintained a Buy rating and a $43 price target on DraftKings shares.

Write to Nate Wolf at nate.wolf@barrons.com