TLDR
- DraftKings announced a “Super App” that combines sports betting, prediction markets, casino, and lottery gaming in one mobile platform
- The app will launch later this month to coincide with the NCAA Tournament and give DraftKings near-national reach
- DraftKings stock rose nearly 7% from Monday to Thursday after the announcement, though it has lost roughly half its value in six months
- The company will use the same pricing and risk infrastructure from its sportsbook to power prediction markets
- Responsible gaming measures from sports betting will apply to prediction markets, including deposit limits and self-exclusion options
DraftKings has unveiled plans for a new “Super App” that will bring sports betting and prediction markets together in one platform for customers across the United States.
The Boston-based gaming company made the announcement during its Investors’ Day presentation on March 2. The app is expected to launch later this month, timed to coincide with the NCAA Tournament.
CEO Jason Robins said the new app takes DraftKings’ existing sportsbook and casino app and adds prediction markets to it. That app already draws more than 80% of the company’s customers.
The Super App will give DraftKings a near-national reach. Customers will be able to use the sportsbook in states where sports betting is legal and switch to prediction markets in states where it is not.
“We will now have a sports product everywhere for customers across the entire country,” Robins said during the presentation.
DraftKings stock showed a mixed initial reaction. Shares dropped 5% in early trading Monday but recovered to close nearly flat at $23.82.
The stock performed better in the following days. By Thursday, shares reached $25.46, a nearly 7% jump from Monday’s close.
DraftKings Builds on Existing Infrastructure
The company plans to use the same pricing, trading, and risk infrastructure from its sportsbook to power the prediction markets platform. Jeanine Hightower-Sellitto, general manager of DraftKings’ predictions unit, said this will allow for broader market availability and deeper content.
Hightower-Sellitto emphasized that liquidity will be central to the user experience. The company hopes to drive customer retention through tight spreads and quick updates.
DraftKings will rebrand its largest app from “DraftKings Sportsbook & Casino” to “DraftKings Sports & Casino” to reflect the new prediction markets division. The user experience will vary by state based on local regulations.
Wall Street analysts have generally responded positively to the announcement. Chad Benyon of Macquarie Capital called it “a smart move” as long as it does not confuse customers.
Truist Securities analyst Barry Jonas noted that launching prediction markets in non-sports betting states could prepare those states for eventual sports betting legalization.
Citizens analyst Jordan Bender said the super app will support more efficient marketing. DraftKings can leverage national broadcasting rights through media partners like ESPN.
Regulatory and Responsible Gaming Concerns
The question of whether prediction markets can offer sports contracts remains unsettled. Courts and Congress may still weigh in on the matter.
DraftKings faces a challenging position. The company risks alienating lawmakers and stakeholders in states that have not yet legalized sports betting, including California tribal nations.
Online sports betting stocks have been hit hard by the rise of prediction markets. Several are down more than 35% over the last year. DraftKings itself has lost roughly half its value in six months.
The company highlighted its responsible gambling practices during the presentation. Chief Responsible Gaming Officer Lori Kalani said the same standards used for sports betting will apply to prediction markets.
“Responsible trading focuses on education, transparency and informed participation,” Kalani said. “Customers can set deposit limits, take cool-offs or self-exclude.”
DraftKings acknowledged it will make incremental marketing investments in the coming months for prediction markets. The company said it can scale back advertising if initial revenue targets are not met.
As of Friday afternoon, DraftKings traded at $25 a share, down 1.8% on the session but up nearly 15% since last month’s earnings call.
