DraftKings Explores Prediction Markets Amid Legal Dynamics

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00:00Of course, one of those books that you alluded to, DraftKings, where its CEO Jason Robbins has

00:05commented recently on the prediction markets. He's bullish on these prediction markets and is

00:12watching actively just where all of this goes from a legal standpoint to potentially

00:17add this to the DraftKings sports book. What do you expect to see happen here?

00:21Yeah, it's really interesting because DraftKings is one of those companies that basically fought

00:25for years to get sports betting legal. They started off as a fantasy sports platform and

00:29they've put in all this work, all this money, all this investment. You have to go to the states and

00:34get legalized, send them fees, taxes, everything. But now you have this alternative model that's

00:39popped up where you don't have to do any of that, at least so far. You can be in all 50 states and

00:43offer a product very similar to sports betting that is, again, not subject to the same rules,

00:47taxes, regulations. So initially, when this popped up, you had investors thinking about

00:53FanDuel, thinking about DraftKings, thinking about BetMGM, these companies,

00:56seeing this as increased competition for them that was not subject to the same rules.

00:59But now what you have here is it came out this week that DraftKings has actually filed to do

01:04this same prediction model where they would be essentially taking bets, but not legally taking

01:11bets. It's allowing people to buy into an investment. So you alluded to Robin's comments.

01:15He said in the past, kind of on the fence, like, oh, it's something we're looking at. We see it

01:20as more of an opportunity than a risk. So if, in fact, these markets are allowed to persist,

01:26we see a company like DraftKings already wanting to get ahead of the game. We saw a similar thing

01:31with Fantasy Sports last year when pick'em models were under scrutiny. The game's popularized by

01:36prize picks and underdogs, which a lot of people were saying is basically just sports betting.

01:40DraftKings got in on that as well, offering a similar product. So it's no surprise to see them

01:45getting ahead on prediction markets as well. Again, this would allow them to basically offer

01:49sports betting in states like Texas, California, Florida, states that don't have it where there's

01:54a huge market for it. So it's no surprise to see them getting into it. But it will be very

01:59interesting to see how it all checks out at the end of the day. We'll have to see what the CFTC says.