The Commodity Futures Trading Commission finalized a set of rules that clarify the legal status of prediction markets, effectively removing the regulatory barrier that had previously limited DraftKings’ ability to expand its prediction‑market offering. The new framework classifies these contracts as federally regulated derivatives rather than state‑regulated gambling, a shift that opens a sizable new revenue stream for the company.
DraftKings has already launched its “DraftKings Predictions” platform in 38 states, including California, Texas, Florida and Georgia—markets where traditional sports betting is not yet legal. The platform allows users to trade contracts on sports and financial events, and the company has positioned it as a key growth engine that could double its addressable market in states without sports‑betting licenses. The launch, completed in December 2025, was part of a broader strategy to capture customers in unlicensed markets and to diversify beyond its core sportsbook business.
The regulatory clarity is expected to accelerate DraftKings’ expansion plans and strengthen its competitive position against rivals such as FanDuel, Robinhood and Coinbase, all of whom are exploring or have entered the prediction‑market space. By removing the uncertainty that had forced DraftKings to pause its plans in April 2025, the company can now invest more confidently in technology, marketing and partnerships—most notably its collaboration with ESPN—to capture market share and generate incremental revenue. Analysts view the move as a significant tailwind that could materially improve DraftKings’ top‑line growth prospects.
CEO Jason Robins said the new rules “confirm that prediction markets are a legitimate, federally regulated product” and that DraftKings is “excited to scale this vertical now that the regulatory path is clear.” He added that the company has already consulted with regulators and policymakers to ensure compliance and that the platform will be rolled out more aggressively in the coming months.
The CFTC’s decision follows the withdrawal of a 2024 proposal that had prohibited sports and politics contracts, and the cancellation of a 2025 staff advisory. By establishing a clear rulemaking process, the commission aims to provide legal certainty for operators and to prevent future lawsuits from states that have challenged the legality of prediction‑market contracts. The move also dovetails with the commission’s broader “Project Crypto” initiative, which seeks to harmonize federal oversight of digital assets and reduce regulatory duplication.
Industry observers note that the entry of large sportsbooks into prediction markets signals a shift in the gaming landscape, as companies seek to defend territory in unregulated markets while also exploring new revenue streams. Traditional gaming stakeholders, such as the American Gaming Association and tribal nations, have expressed concerns that prediction‑market contracts could undermine state gambling laws, but the federal classification is expected to mitigate those risks for operators like DraftKings.
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