DraftKings Jumps on Railbird Deal, Entering Prediction Markets
The acquisition of the federally licensed platform Railbird gives DraftKings access to a new 50-state market, drawing praise from Wall Street.
DraftKings Inc. (NASDAQ: DKNG) announced its acquisition of prediction market platform Railbird on Tuesday, a strategic maneuver that grants the sports betting giant immediate entry into the federally regulated event contract trading sector. The move, which opens a potential 50-state market, was met with investor enthusiasm, sending DraftKings shares up more than 5% in after-hours trading.
The deal provides DraftKings with Railbird's coveted Commodity Futures Trading Commission (CFTC) license, allowing it to operate a regulated prediction market exchange across the United States. This accelerates the company's expansion into a new vertical that circumvents the patchwork of state-by-state approvals required for sports betting, .
Financial terms of the deal were not disclosed. Following the news, DraftKings' stock, which closed Tuesday's regular session at $33.62, climbed in post-market activity. The company, with a market capitalization of nearly $17 billion, has been actively seeking new growth avenues to complement its core sports betting and iGaming operations.
Prediction markets, which allow users to trade contracts on the outcomes of real-world events ranging from economic data releases to entertainment awards, represent a significant untapped market. Crucially, because they are regulated at the federal level by the CFTC, they can be offered in states where online sports betting remains illegal, such as California and Texas.
This strategic advantage was not lost on Wall Street. Analysts at Benchmark quickly responded to the news, reiterating a "Buy" rating on DraftKings and raising their price target from $45 to $50. In a note to clients, the firm called the acquisition "a very positive development," highlighting the high-margin, scalable nature of the business and its ability to operate without state gaming or federal excise taxes.
This move marks a swift resolution to DraftKings' ambitions in the sector. The company had previously applied for its own federal license to operate a prediction market but withdrew the application earlier in 2025. By acquiring Railbird, which only secured its Designated Contract Market (DCM) status from the CFTC in June 2025, DraftKings has effectively fast-tracked its market entry.
"This is a key cog in DraftKings' strategy for 2025-2026," noted Deutsche Bank analyst Carlo Santarelli in a previous report discussing the company's M&A prospects. DraftKings has a well-established history of growth through acquisition, having previously bought Golden Nugget Online Gaming in 2022 and, more recently, lottery courier Jackpocket for $750 million in early 2024 to expand its user base.
The acquisition of New York-based Railbird, founded in 2021, provides DraftKings with both the regulatory license and the technological infrastructure to launch its new service, which will be branded "DraftKings Predictions." The company stated it plans to launch a new mobile application in the coming months, integrating Railbird's platform.
The broader industry has been watching the evolution of prediction markets as they blur the lines between financial trading and traditional gaming. While some platforms have faced legal and regulatory challenges, , creating momentum for the sector's growth. DraftKings' entry is expected to significantly raise the profile of prediction markets and could spur competitors to make similar moves.
The focus now shifts to execution. Investors and analysts will be closely monitoring the technical integration of Railbird's platform and the subsequent launch of the DraftKings Predictions app. The early user adoption metrics and revenue generation from this new vertical will be critical in determining if the acquisition can deliver on its promise to unlock a new, highly profitable chapter for the Boston-based gaming company.