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DraftKings is reportedly working behind the scenes to acquire Railbird Exchange, a prediction markets platform that received a federal license last month.
It is fueling speculation the sportsbook could use the platform to work around California’s prohibition on sports betting.
It comes on the heels of three California tribes filing suit against several prediction platforms to stop them from operating on tribal lands.
FanDuel reportedly looking to do the same
It’s still uncertain how far along in the process DraftKings is in acquiring Railbird, or even if the move would be approved. DraftKings applied for a federal license to operate a prediction markets platform last summer but withdrew the application in April, according to Front Office Sports.
A DraftKings spokesperson refused to acknowledge whether the company was seeking Railbird.
“DraftKings speaks to a variety of companies regarding various matters in the normal course of business, and it is our general policy not to comment on the specifics of any of those discussions.”
Interestingly, the Front Office Sports story noted that DraftKings’ sports betting competitor, FanDuel, is exploring a similar arrangement with Kalshi.
CA tribes sue Kalshi, other prediction platforms
Earlier this week, the Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk, and the Picayune Rancheria of the Chukchansi Indians tribes filed suit against Kalshi, Robinhood, and 20 unnamed defendants, alleging the prediction markets constituted illegal sports betting.
According to the lawsuit:
“Kalshi is engaging in illegal sports gambling on the tribes’ reservations disguised as event contracts that allow people to speculate on the outcome of a sporting event.”
A New York Post article speculates that DraftKings’ and FanDuel’s fruitless negotiations with tribes to bring sports betting to California may be leading them to prediction markets as a back door into reaching sports enthusiasts in the nation’s largest state.
Chris Grove, a managing partner at Acies Investments and sports betting angel investor with a stake in Underdog, told the Post as much recently.
“Online sports betting operators have struggled to find a path into California. And if a path doesn’t emerge, prediction markets will become increasingly appealing, especially if DraftKings and FanDuel feel like they’re losing ground to Kalshi and Polymarket.”
Kalshi’s earlier win
Kalshi won a court case last September which could help its standing in the California case. Basically, the ruling allows it to operate its prediction market across the US.
Kalshi’s event contracts (wagering options) are viewed as financial instruments that fall under federal commodities law rather than state gaming laws. Some states have pushed back on Kalshi’s claims, accusing it of skirting state sports betting regulations and the taxes that come from it.
Kalshi’s prediction markets extend far beyond sports. Current event contracts available include the 2028 Democratic presidential nominee, the next Nobel Peace Prize winner, and a question acutely consuming Americans: “Who will be named in the Epstein files?”
