DraftKings acquires predictions platform Railbird

DraftKings is acquiring prediction platform Railbird, which is preparing to launch a mobile platform to be called DraftKings Predictions in the coming months.

Railbird is licensed to offer an event contract exchange by the Commodity Futures Trading Commission. DraftKings targeted the company because of its team and proprietary technology.

“We are excited about the additional opportunities that prediction markets can represent for our business,” DraftKings CEO Jason Robins said in a statement to CNBC. he said. “We believe Railbird’s team and platform, combined with DraftKings’ scale, trusted brand, and proven expertise in mobile-first products, position us to win in this growing space.”

Prediction markets allow customers to trade on the outcomes of various events in the financial, cultural and entertainment worlds, which will allow DraftKings to expand beyond the sports betting business. Markets related to election results and sports are the most controversial.

Dozens of states, their gaming regulators and tribes are suing or taking other action to ban companies from offering commerce based on sporting events because they view it as unlicensed gambling.

Nevada is among states that have warned companies risk losing their gambling licenses if they offer sports in prediction markets.

If DraftKings does offer sports events contracts, it will likely focus only on states that do not offer licensed sports betting, such as California and Texas, to avoid running afoul of states where it offers sports betting. Additionally, the technology exists to prevent these sports businesses from existing on tribal lands.

DraftKings may also offer more advanced “know your customer” guardrails, a term commonly used to refer to identity verification, given its experience in the regulated gambling market.