DraftKings’ embrace of prediction markets may not have been as successful as previously believed.
ProphetX, a peer-to-peer sports prediction market exchange, produced a notional trading volume five times larger than DraftKings’ hub for prediction markets, DKeX, in August. That’s despite ProphetX launching later and DraftKings’ huge presence in the gambling industry, which it plans to leverage to grow into prediction markets.
Fortunate timing
DKeX launched on June 26. DraftKings used internal infrastructure from Railbird, which it acquired in Oct. 2025, to create its Commodity Futures Trading Commission-licensed home for prediction markets. DraftKings had offered prediction markets t customers with the assistance of third parties since Dec. 2025.
DKeX's launch came just a few weeks before the FIFA World Cup, which produced a series of records in the betting and prediction industries. DKeX benefited greatly from the timing, generating approximately $3.4 billion in annualized consumer volume and $11.3 billion in annualized trading volume during the week that ended on June 21, less than one month post-launch.
The company’s stock price increased 11.3% from $23.10 to $25.70 during the 24-hour period before DKeX’s launch through the day of and later climbed as high as $27.17 on July 8, up 19.9% on its original price.
Despite all of the positive indicators, there are questions about DKeX’s true position in the market without the aid of the most popular sports event in the world.
DraftKings prediction markets still untested?
DraftKings reported Q2 revenue of $1.4 billion, down 5% year-over-year and missing analyst expectations of at least $1.5 billion. Sports betting companies’ bottom line is heavily influenced by outcomes in marquee sports events, and public-friendly outcomes in the NBA Finals and World Cup did not work to the company’s benefit.
Although it's still early, prediction markets are also weighing down DraftKings. Analysts noted that category losses could reach $200-300 million before the end of the year, while Bernstein lowered its price target to $27 following the report. Bernstein still has an “outperform” rating on DraftKings.
The question that DraftKings is still yet to answer is whether its early success in prediction markets was due to the World Cup or a great product package. ProphetX, a much smaller company, considering all of DraftKings’ resources, handling a trading volume five times larger than DKeX is a strong warning sign.
Important times ahead
Prediction market operators have routinely argued that they are different from sports betting companies, both in their product and regulatory standards. But just like sportsbooks, they have suffered from the “dead period” in American sports.
The return of the NFL on Sept. 9 will provide companies such as DraftKings the opportunity to offer its product in a competitive environment, in which there are no shortage of trading events or operators. DraftKings previously said it was prepared to fully jump into prediction markets by adding further investment, and football season is the most popular time for sports fans across the country.
In anticipation of that, DKeX recently launched combos, the prediction market equivalent of sportsbooks parlays, which allows users to package multiple outcomes into one contract with a larger possible payout.
As a reference of what DKeX is chasing, prediction market leader Kalshi processed an all-time high of $2.1 billion in contract trades on July 11 — nearly 20% of DKeX’s annualized trading volume during the week that ended on June 21.
The Trade Handle Prediction Markets Take
DraftKings is about to enter its first NFL season with prediction markets. Beyond that, the industry as a whole is about to experience its first football fall in front of mainstream audiences. DraftKings CEO Jason Robins previously said that his company was ready to win prediction markets, and that will be put to the test over the coming months.