By Nick Devor
Prediction markets can be used as a "powerful lever" to pressure states to legalize online sports betting, DraftKings CEO Jason Robins said in an earnings call Friday morning.
The comments add to a growing debate about the nationwide rollout of prediction markets, which can be used to gamble on sports, even as traditional online sports betting remains illegal in 19 states, including California and Texas.
Event contracts provided by prediction markets, including those that allow customers to wager on the outcome of sports, have been deemed financial instruments and are regulated at the federal level by the Commodity Futures Trading Commission. Sports betting is regulated by the states.
Prediction markets aren't subject to state laws or taxes, even though they can effectively replicate the sorts of sports betting that fall under state jurisdiction.
DraftKings said this week that it plans to include sports event contracts in its prediction market platform, DraftKings Predictions, which it said would launch in the coming months.
Robins believes that state lawmakers will be motivated to expand sports betting within their borders once they see constituents participating in a form of sports betting that brings no money into state coffers.
"As states see this continue to grow it's going to put increased pressure on policymakers to strongly consider whether they should follow the path of the other half or so of the country and just pass sports betting legislation," Robins said.
In Texas, past bills to legalize sports betting haven't gotten out of the legislature, while California voters overwhelmingly rejected a ballot measure in 2022 to legalize online sports betting.
Robins called it a "no-brainer to focus on the states that don't have online sports betting already."
The move by DraftKings is likely to be controversial within the gambling industry. The American Gaming Association is opposed to sports event contracts offered by prediction market firms like Kalshi and Polymarket.
"These operators have a word to describe what it means to ignore the rules," Bill Miller, the lobbying group's CEO, said at an industry conference in Las Vegas last month. "They call it innovation. I call it something else. It's greedy, it's reckless, and it's irresponsible."
The American Gaming Association didn't respond to requests for comment on DraftKings' plans.
On Friday's call, Robins suggested that prediction markets could also have an impact on the state taxes that betting platforms pay on wagers.
"I also think it's going to make policymakers think twice about tax increases," Robins said, nothing that gambling operators can pivot to prediction markets "if the taxes get too high."
"This is one of the many reasons I think it's a huge positive for us," he added. "It's a powerful lever in terms of what policymakers are going to be thinking and legislators are very aware of it."
Wall Street analysts have cited increased gambling taxes as a headwind for DraftKings stock. Shares have been volatile since the company reported disappointing results Thursday afternoon. They fell sharply in after-hours trading Thursday evening, before rising 3.8% on Friday.
Rollout of sports event contracts won't be immediate, and Robins noted a lack of data to inform the company's prediction market strategy. The company also needs to protect its current business and relationships.
"We really value and treat with the utmost importance our relationships with regulators and policymakers in states where we are licensed and operate," Robins said Friday.
Write to Nick Devor at nicholas.devor@barrons.com
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November 07, 2025 13:53 ET (18:53 GMT)
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