A DraftKings executive acknowledged that sportsbooks and trading sports event contracts feel similar for consumers during a Milken Institute panel, as operators of prediction markets argue the products are legally distinct from sports betting.
The discussion featured executives from DraftKings, Robinhood and Kalshi, and repeatedly returned to the increasingly blurry line between sportsbooks and federally regulated prediction markets.
Their comments come amid a widening legal fight involving more than 20 lawsuits across at least 13 states over whether sports contracts fall under federal commodities law or state sports betting regulations.
DraftKings: ‘definitely feel as though it’s the same’
Axios moderator Dan Primack repeatedly pressed executives on the widening overlap with gambling.
“Sportsbooks offer, for sports, a better consumer experience than prediction markets overall,” DraftKings president of operations Paul Liberman said. “For our customers that are in sportsbook jurisdictions, they prefer to still do business with a sportsbook.”
“Although for the end user, it’s the exact same damn thing,” Primack quipped back.
“For the end user, yes,” Liberman responded. “Whether they’re putting a bet on the sportsbook or whether they’re doing a trade on the Celtics here, they definitely feel as though it’s the same.”
DraftKings, FanDuel and Fanatics all launched prediction products in late 2025, a move that led all three to leave the American Gaming Association. Sportsbook rivals including BetMGM and Caesars continue arguing the products amount to unlicensed sports betting.
“If we can participate in the different states, we are going to participate,” Liberman said.
Why are prediction markets embracing sports?
Brian Quintenz, a Kalshi board member, former CFTC commissioner and President Trump’s withdrawn nominee to lead the agency, defended prediction markets as federally regulated derivatives products and touted their public benefit.
“The entire purpose of derivatives markets is information discovery, price discovery, and risk management,” Quintenz said. “There is a pricing formation event. There is an opportunity to hedge economic risk or sense what that probability is.”
Primack asked if prediction markets are embracing sports because it lets them operate in states where traditional sportsbooks remain illegal.
“I know that a state can’t ban one of its citizens from participating in a federally regulated exchange on a derivative contract,” Quintenz said.
Kalshi launched its first sports event contract ahead of the Super Bowl in 2025. Since then, the company’s valuation has surged from roughly $22 million in 2024 to a reported $22 billion by March 2026. LSR reporting has found sports account for roughly 85% to 90% of Kalshi’s trading volume over the past year.
Who sets odds on prediction markets?
Primack noted that Kalshi and Polymarket executives have publicly argued their markets offer a superior consumer experience because users are trading against a marketplace rather than betting against the house.
“It is an absolutely different model,” Quintenz said. “The odds are not set by the house. The revenue stream is different. The regulations on running a marketplace are severe. I don’t know much about sportsbook regulations, so I’m not going to say they’re more severe. They’re severe.”
Liberman pushed back on the idea that prediction markets are simply retail customers trading against one another.
“Most often on a prediction market, you are betting against or trading against a market maker or a sharp,” Liberman said. “Realistically with sports, it moves so fast that on the other side, in order for you to really participate, you have to be using APIs, you have to be using scripts.”
“If we were completely different on price, there would be an arbitrage opportunity,” Liberman said. “So the pricing is very similar between prediction markets and sportsbooks.”
Prediction markets to keep evolving
Robinhood chief investment officer Stephanie Guild framed prediction markets less as gambling products and more as real-time information tools that could eventually integrate into broader investing strategies.
“I actually think using a combination of X and podcasts and prediction markets might actually give you a better signal than just reading institutional research,” Guild said.
Robinhood launched its “Prediction Market Hub” in partnership with Kalshi shortly after the exchange expanded into sports, bringing sports event contracts directly into one of the country’s largest retail trading platforms.
Guild suggested prediction markets could eventually become embedded within retail portfolios as both speculative and hedging products.
“In my dream world, it would be in the next year or two,” Guild said. “I do actually think there’s a lot of interesting ways to put hedges in a managed portfolio.”
DraftKings expects sports contract products to become increasingly “dynamic,” particularly around micro-markets and faster in-game contracts, Liberman added. He also suggested those markets could eventually support more advanced real-time offerings similar to the increasingly granular microbetting products sportsbooks already provide.
Earlier this year, DraftKings announced plans to aggressively invest in predictions markets ahead of football season, as earnings guidance came in roughly $200 million below Wall Street expectations.
