DraftKings CEO and co-founder Jason Robins said that DKeX, the company’s in-house prediction market exchange, has climbed to third place among US operators within months of its launch in late June.
Robins spoke during a Q&A session with CNBC‘s Contessa Brewer at the NEXTPredict Summit in New York City on Thursday.
“We only launched the DraftKings exchange a few months ago, and we’re already the clear No. 3, which is great, and we continue to gain share,” Robins said. “I think the fact that we are now a relevant player in the market and look to be one of those that is on the rise, I think, is giving us more attention.”
The Boston-based company operates one of the two largest online sportsbooks in the US, and its in-house exchange gives it full control over its prediction market economics.
Third place by trading volume
Data from Aldrin Research supports the claim. DKeX ranked third in notional trading volume for the week that ended October 18, with $1.04 billion in trades and a 3.57% market share, up from 2.33% for the week ended September 26.
Kalshi held a clear first place, while Polymarket finished a relatively distant second.
Volume remains concentrated between those two operators, although DKeX is viewed as one of the most credible competitors in the next tier. Operators in the crowded sector are spending heavily on infrastructure, regulatory approvals and customer acquisition.
“We’ve done that with a much more limited state footprint than all of the others that we’re talking about competing with,” Robins said.
A self-imposed limit on sports contracts
DraftKings Predictions operates in 38 states, but its full suite of event contracts is available in only 18, including California, Florida and Texas.
In sports betting states such as Colorado, New York and Pennsylvania, the platform offers only financial event contracts because DraftKings avoids sports event contracts where it books traditional sports wagers. Rivals do not follow similar restrictions.
Robins acknowledged that DraftKings would be more prominent if it could offer sports contracts in a state like New York.
“The alternative was we would have had our licenses under threat, and I think that wouldn’t have been a smart move,” he said.
The company still advertises DraftKings Predictions in all 50 states under its “super app” strategy, although products vary by state. In Nevada, for example, DraftKings offers only free-to-play sports contests.
Robins credited the company’s sportsbook experience. “We know what works,” he said. “We know what customers want.”
Prepared for either Supreme Court ruling
Legal challenges to sports-related event contracts, by far the most popular prediction market product, are inching closer to a US Supreme Court ruling. Robins said some companies “have really staked a lot on one outcome or the other.”
“We actually feel like we put ourselves in this win-win spot where no matter what the outcome of that whole process is, we are well positioned going forward,” he said. “And I’m hopeful that it ends up being something that is allowable over the long term. But I also feel like if that doesn’t happen, we’re in a great spot.”
Robins added that the company was pleasantly surprised by growth in non-sports markets, including financial contracts, which could remain viable even if courts eliminate sports event contracts. That growth partly explains DraftKings’ significant investment in the platform.
Investors wary of regulatory uncertainty
DraftKings shares have fallen more than 40% this year amid the boom in prediction markets. While some investors fear the exchanges will take business from state-regulated sportsbooks, Robins blamed uncertainty over the federally regulated exchange business.
“Private markets love uncertainty,” Robins said. “That’s what they thrive on. They like big beta. Public markets are the opposite. They do not like uncertainty.“
“I think the more that people come to understand that we’re really well positioned either way, I think we’ll start to overall get more credit for that,” he added.
Response to recent criticism
Robins also addressed DraftKings’ use of artificial intelligence and its responsible gambling efforts after recent negative press. He said the company does the opposite of targeting problem gamblers and refers them to a specialized team.
“It’s just completely not how we’re built and how we philosophically and in-practice operate,” Robins said.
He added that some people simply do not like gambling: “I can’t really change their minds on that if you’re starting from a stance that we just don’t like the industry and we think that you’re bad people.”
Robins said little about the Seminole Tribe’s recent lawsuit against him and the company in Florida. He found it interesting that DraftKings was singled out, since other prediction markets operate in the state, but said he could not speak to why.