DraftKings has acquired Railbird, a CFTC-licensed exchange, to create its own prediction market. Polymarket is reportedly collaborating to function as the clearinghouse for this new venture.
Up to now, this announcement hasn’t stirred much tension between conventional gambling and risky Web3 betting. Nevertheless, experts are voicing concerns about potential negative repercussions for both the economy and society at large.
DraftKings to Initiate Prediction Market
Prediction markets like Kalshi and Polymarket have seen considerable recent success in the realm of sports betting, with other Web3 firms such as Robinhood following suit. Therefore, it’s logical that DraftKings would take this step by launching a prediction market.
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Having explored Web3 four years ago, a prediction market appears to be a natural progression for DraftKings, a well-known sports betting app.
According to the company’s press release, it acquired Railbird, a CFTC-regulated exchange, to achieve this goal. The Railbird team and its infrastructure will facilitate the operationalization of this new market.
Polymarket Acknowledges New Partnership
At first glance, it may seem that established Web3-native prediction markets could disapprove of DraftKings’ latest move, particularly given the profitability of sports betting. However, this sector has already been a testing ground for interactions between traditional finance (TradFi) and crypto.
Furthermore, this expansion comes with at least one clear partnership. Shayne Coplan, CEO of Polymarket, commended the Railbird acquisition, affirming that Polymarket will serve as DraftKings’ clearinghouse for its emerging prediction market:
Additionally, Polymarket has been undergoing expansion recently, with substantial institutional investments driving new product launches across various sectors. The prediction market lacks substantial reasons to resent DraftKings’ enlargement, especially since Polymarket stands to gain directly.
Potential Downstream Implications
However, DraftKings’ actions may only heighten fears that prediction markets pose risks to the financial sector. Tech journalist Jason Mikula described the Railbird acquisition as a “convergence between finance/investing and literal gambling,” cautioning about potential dangers.
As the distinctions between institutional investments and legalized sports betting continue to blur, numerous new challenges could emerge. Even if rampant speculation doesn’t trigger a financial collapse, which is quite possible, gambling is inherently addictive and hazardous.
In essence, the continued infiltration of gambling into the TradFi landscape could pose significant issues in its own right. As these platforms gain further acceptance, everyday fans will increasingly find it easier to face financial ruin.
