DraftKings Sportsbook Reports $2.5 Trillion In Equivalent Prediction Markets Volume For 2025
DraftKings spoke extensively about Predictions in Q4 earnings. Roundup: MLB commissioner is eyeing prediction markets deals; Israel indicts two people for betting on military action at Polymarket.
Trying to arrive at what equivalent “handle” is at prediction markets from their trading volume is currently an inexact science. But what does equivalent trading volume look like at sportsbooks?
Well, DraftKings gave us that number, at least for its business: $2.5 trillion dollars. From CEO Jason Robins’ letter to shareholders after reporting Q4 earnings:
I would also like to touch on the scale of our Sportsbook business. In fiscal year 2025, our Sportsbook handle increased 11% year-over-year to $54 billion. Our total potential payouts* across all open wagers, or capital at risk, was $2.5 trillion due to the multiplicative nature of parlays. We achieved this scale even though our Sportsbook is only available to about half of the U.S. population.
*Total potential payouts, or capital at risk, is comparable to volume that Predictions operators report.
If we’re trying to read between the lines, the point DraftKings is trying to make is this: For all the breathless reporting about volume at prediction markets and particularly Kalshi, it’s still small, most notably in its parlay business.
Last year, volume at Kalshi and its partners was $24 billion. There has already been $14 billion in volume via Kalshi and company this year. Parlays have accounted for a little less than $3 billion of that volume, by my tracking.
Trying to arrive at handle from prediction market volume is a bit of a guessing game currently, as there’s not a great way to divine how much of volume is something that we would see in a sports betting setting.
We can definitively say volume is certainly not handle. When you bet $1 at sportsbooks to win a total return of $10 (including your original bet), that’s $1 of handle. If you bet $1 at Kalshi for a total return of $10, that’s $10 in volume. Could that other $9 of volume be considered handle, sometimes, depending on who your counterparty is? Possibly. But oftentimes it will be a market maker that is playing the same role as the house at a sportsbook. That’s not something anyone would consider “handle.”
DraftKings also noted in its earnings presentation that it is not seeing any impact from prediction markets on current business, in line with what BetMGM reported last week.
Other things we learned from DraftKings via its shareholder letter on Thursday:
DraftKings will be launching a “market-making division.”
Railbird — the designated contract market DraftKings purchased — will be deployed later this year.
Robins noted that DraftKings is targeting “hundreds of millions in annual revenue” in the coming years and that “Predictions could represent a $10 billion annual gross revenue.”
DraftKings says its revenue and Adjusted EBITDA guidance ranges “reflect our expected investment in DraftKings Predictions.” The guidance for 2026: “revenue of $6.5 billion to $6.9 billion and Adjusted EBITDA of $700 million to $900 million.”
Predictions had “the second most downloads in its category and delivered 3x its prior record for daily trading volume” on Super Bowl Sunday. DraftKings also noted that “customer retention is also strong so far.”
Here are more excerpts from the shareholder letter:
Predictions is rapidly developing into a massive, incremental opportunity, and we are moving with urgency. We expect to emerge as the leader in this nascent category. We plan to deploy growth capital to build the best customer experience in Predictions and acquire millions of customers. This year, we anticipate significant step-function improvements to our Predictions offering including the integration of Railbird and launch of our market-making division. We are targeting hundreds of millions in annual revenue for DraftKings Predictions in the years ahead, and we believe there is much more upside over the long-term. This should translate to meaningful incremental Adjusted EBITDA. In Predictions, we have the playbook to execute and win. …
We have been building DraftKings for more than 14 years. When a new growth lane opens, we move fast and execute at scale. Predictions is the most exciting new growth opportunity we have seen since PASPA was struck down in 2018. Early signals are strong. On Super Bowl Sunday, DraftKings Predictions had the second most downloads in its category and delivered 3x its prior record for daily trading volume. Customer retention is also strong so far, even with a product that is in its early stages and positioned to improve rapidly as we add content. In Predictions, speed and execution, combined with a strong brand, smooth interface, and real sports modeling, trading, and technology expertise, will determine long-term leadership. This is where DraftKings thrives.
The opportunity here could be large. Based on analyst estimates, Predictions could represent a $10 billion annual gross revenue opportunity in the years ahead. We expect to capture it across multiple business lines, including the customer-facing platform, our own exchange, and market-making. We expect the volume on DraftKings Predictions to keep building, with growth accelerating through 2026 and beyond. Our goal is simple: we intend to lead the Predictions category.
As such, we support the CFTC’s engagement on event contracts and the advancement of a more defined and durable regulatory framework. The CFTC Chair recently directed agency staff to establish clear standards for event contracts to provide certainty for market participants. We view this direction as constructive. Clear rules should reward operators with strong compliance and responsible engagement infrastructure, and support the expansion of sports-related Predictions over time.
We bring sports, trading, and technology together at scale, backed by strong distribution. We originate prices and manage risk every day in our Sportsbook. We have hundreds of data scientists and machine learning engineers building sports models, plus a dedicated trading desk that fine-tunes live pricing in real time. We pair that with a trusted brand, a large customer database we can activate efficiently, and marketing relationships like ESPN and NBCUniversal that give us flexible, high-intent inventory to deploy as returns dictate.
We have run this playbook before. In Fantasy, Sportsbook, iGaming, and Lottery, we built leadership positions by steadily bringing critical technology in-house. In Sportsbook, we successfully integrated acquisitions and continued investing deeply in our proprietary technology to deliver the #1-rated product. Our Sportsbook product is far ahead of our peers in uptime, which is the percentage of a game during which odds are available. Predictions is the next chapter of this same strategy. We have already designed our product to improve rapidly.
Our product is built to scale. DraftKings Predictions already connects to multiple exchanges so we can stay nimble as trading options evolve and continuously expand content availability and liquidity. Our recent Crypto.com integration was an immediate upgrade in breadth and engagement, adding new trading options across categories such as player performance markets, golf, UFC, and politics. Next, we plan to integrate Railbird near the middle of this year to improve innovation velocity and strengthen customer economics by owning more of the stack.
We are also launching market-making because liquidity is a core part of the customer experience in Predictions. Contract listings, fees, market structure, and distribution matter, but tight two-way markets with depth are what attract participants. Exchanges seed liquidity by incentivizing market-makers, and DraftKings can lead marketmaking for sports contracts because we model sports probabilities exceptionally well and have the infrastructure to provide liquidity across a broad spectrum of contracts.
This creates two revenue engines for DraftKings in Predictions. First, transaction fees, as we own the customer relationship through DraftKings Predictions and offer a platform to trade across sports and non-sports. Second, trading economics from market-making and proprietary trading, on our own exchange and, where it makes sense, on other exchanges. Over time, we also intend to introduce exclusive combination trading options that may become a major differentiator as the customer experience evolves.
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Everything I wrote about prediction markets this week
Prediction markets news roundup
New CFTC Chairman Michael Selig on How to Regulate Prediction Markets (Odd Lots podcast, Bloomberg) or on Apple Podcasts: “We are rapidly entering a world in which there are odds on virtually everything. During the recent Super Bowl, the big prediction market platforms didn’t just offer bets on the game itself, but also on more exotic facets, such as the first song that Bad Bunny would sing, even who would join Bad Bunny in the performance. And while a lot of people think this looks like gambling, it’s actually regulated by the CFTC, an agency created in the 1970s to regulate derivatives. On this episode, we speak with new CFTC Chairman Michael Selig, who was nominated by President Trump and took his position in December. We talk to him about his philosophy, and why it is that these new bets are regulated as financial instruments, rather than gambling products. We talk about the tension that emerges when 18-year-olds can place bets on sports via prediction markets, even though many states have laws on sports gambling, either banning it outright, or requiring participants to be at least 21. We also talk about crypto regulation, and whether perpetual futures -- which have exploded in the crypto space -- could soon be coming to traditional markets.”
💡My take: This is, of course, worth a listen, because it’s the regulator of the CFTC, which oversees prediction markets, talking about PMs for most of a podcast!
It’s also arguably not worth a listen, because Selig manages to say very little of substance. I was hopeful heading into my listen that we would learn more about what kind of rulemaking we might get, but we got little on that front.
You would think this is a joke but it’s literally an exchange that happened on the podcast!
Dan Bernstein@dan_bernstein_Odd Lots: What's the economic utility of Cardi B bets? Mike Selig: Let's talk about 1930s grain4:47 PM · Feb 12, 2026 · 6.08K Views5 Replies · 1 Repost · 28 Likes
One of the ideas that has been floating around is that prediction markets could be used to offer something like an online casino. And I think this is an important note:
John A Pappas@yanni_dcJust listened. He didn’t say “no” and did say there could be a way to do it as an event contract. But sure states, let’s just ignore the chance to properly regulate iGaming.
Dan Bernstein @dan_bernstein_Just minutes later, the CFTC chair says a roulette wheel prediction market would be different because there's a "clear economic risk" NFL playoff results for local businesses.1:15 AM · Feb 13, 2026 · 1.35K Views2 Replies · 7 LikesHere are some thoughts from attorney Andrew Kim on Twitter that seem smart to me, with some handy-dandy time stamps:
I am really confused by what, exactly, the skill v. chance distinction has to do with whether a contract is a derivative/financial product. (11:33)
The economic consequences associated with winning a CS:GO tournament (a contest of skill) can be the same as winning a slots tournament (a contest of chance): you win the prize money.
I take the broader point that sporting events, particularly tentpole events, have economic consequences attached to them. But that's true of the WSOP, too. (Don't come at me, "poker is a game of skill" people -- I'm on your side, the law is not.)
And for the umpteenth time, it is not always the case that sports bets are considered "gambling" because of the skill v. chance distinction. Some state gaming regulators have recognized that there is some skill involved in sports betting (same for horse racing).
(16:20) I don't think it's fair to say that state gaming regulations aren't "robust" compared to CFTC oversight of prediction markets. They are "robust" in different ways; state gaming laws and CFTC rules are trying to do two different things.
It’s also not clear whether the CFTC thinks it can’t be a merit-based regulator, or that it doesn’t want to be. The CEA’s Special Rule clearly gives the CFTC some leeway to be a merit-based regulator by making public-interest determinations.
(29:38) A good thing that Chair Selig wants "clear rules of the road." Notice-and-comment rulemaking is a good thing. It'll just take time. Lots of it.
(31:51) It seems like the CFTC is thinking about the circumstances under which margin trading should be offered for event contracts -- if we're heading there, good to think about what oversight looks like.
(40:35) This seems to be the CFTC's answer to, "if sports event contracts are swaps, why aren't all sports bets swaps/why aren't all sportsbooks unregistered DCMs?" … "You have to go through a clearinghouse, the products can be offset, you can get in and out of your position..."
(45:52) "But look, you can serve alcohol in a casino and allow people to bet on sports. You can't do that necessarily at a digital exchange." That does give rise to the question: how would Benny Binion run a DCM?
SEC Chair Suggests Some Prediction Markets Could Fall Under Agency’s Jurisdiction (Decrypt): “Prediction markets are exactly one thing where there’s overlapping jurisdiction potentially,” Atkins said, in response to a question from Sen. Dave McCormick (R-PA). “That is a huge issue we’re focused on.”
“It’s mostly, at least currently, on the CFTC side,” the SEC chair continued. “But we need to be harmonized in the way we’re addressing these markets.”
“When McCormick asked whether the SEC would need legislation passed by Congress to involve itself in regulating prediction markets, the agency chief indicated the agency is ready to move now.”
“I think we have enough authority,” Atkins replied. “A security is a security regardless of how it is, and some of the nuance with prediction markets and the products depends on wording and what exactly is being done.”
Back in September, Atkins issued a joint statement with then-Acting Chair Caroline Pham that included this on prediction markets:
Prediction markets, while they have existed around the world for decades, are undergoing rapid growth with growing demand from both market operators and the public. We should work together to provide clarity for innovators that want to list event contracts on prediction markets responsibly, including those based on securities. The SEC and CFTC should examine opportunities to collaborate to consider where event contracts may be made available to U.S. market participants regardless of where the jurisdictional lines fall.
MLB considers partnership with prediction markets, Manfred says (ESPN): “Major League Baseball is considering partnering with prediction markets, commissioner Rob Manfred said Thursday, a move that would further tie the league to sports betting while two Cleveland Guardians pitchers face federal charges for an alleged pitch-rigging scheme.”
“Owners were briefed this week at their quarterly meetings about the possibility of partnering with Polymarket and Kalshi, federally regulated markets that allow wagering in an endless array of areas, including sports. …”
“Striking a deal with prediction markets, the commissioner said, would allow the league similar access to monitor a business so new that Manfred only learned of it in recent months….”
“We thought it was important for the owners to be updated on why prediction markets are different than sports betting -- why we might want to consider being in business with prediction markets in an effort to protect our integrity, to get the kind of protections we need,” Manfred said. “The regulatory framework, very different. Obviously state by state on the sports betting side, federal on the other.”
💡My take: So, if you’re keeping score, that’s signals from both MLB and NBA this week that they are not keeping prediction markets entirely at arm’s length. In a world where sports event contracts aren’t going away in the short term, you could almost argue the leagues have no choice but to move toward deals like these. Of course, they do have a choice. But it’s also getting hard to blame them for getting involved, even if it’s just for integrity monitoring.
However, they are also getting involved in another form of gambling at a time when gambling is under a microscope. And they are signing up for a regulatory regime that doesn’t contemplate prediction markets as gambling companies, and may not give them anything they really want.
Israel indicts reservist, civilian for using classified information to bet on IDF military action (Jerusalem Post): “An Israeli civilian and an IDF reservist were indicted on Monday in the Tel Aviv District Court on charges of exploiting classified military information to place wagers on the prediction-market platform Polymarket. The case concerns acute operational-security risks during wartime, according to the authorities, the court reported Thursday.”
The suspects were arrested in a joint operation involving the Shin Bet (Israel Security Agency), a Defense Ministry’s investigative unit, and the Israel Police. The investigators suspected that reservists had been betting on the timing of military operations based on classified information they had access to during their service.
And from the Times of Israel: “The defense establishment emphasizes that placing such bets, based on secret and classified information, poses a real security risk to IDF operations and to the security of the state,” the joint statement says, adding that authorities view “the acts attributed to the defendants with utmost severity and will act decisively to thwart and bring to justice anyone involved in the unlawful use of classified information.”
💡My take: This episode comes as there has been a spotlight on insider trading in the prediction markets industry. And while people were caught this time, the crime arguably only took place because they had an opportunity to bet/trade on it at Polymarket. Notably, these types of markets have not been listed at CFTC-regulated entities.
Also, some prediction market evangelists have opined that insider information is actually good, because it gets us to the truth faster. At least for examples like this, that argument is getting more difficult to stand behind.
The Prediction-Market Scandals Are Getting Bleaker (New Yorker)
Polymarket’s pop-up grocery store opens:
Polymarket@PolymarketNew York City, we’re open. The Polymarket opens its doors at 137 7th Ave S. New York, NY 10014 — starting at 2pm today. New York City’s first free grocery store. Built by New Yorkers. For New Yorkers.
3:08 PM · Feb 12, 2026 · 821K Views425 Replies · 236 Reposts · 2K LikesI visited Polymarket’s free grocery store. It was more impressive than Kalshi’s similar stunt (Business Insider, paywall): “Prediction markets Polymarket and Kalshi are in a two-week grocery war, both propping up short-term free supermarket stunts in New York. Last week, Kalshi took over a Westside Market for a day. On Thursday, Polymarket debuted its own store.”
“I stepped inside the store two hours before it officially opened as part of a press preview. The store was pristine, unmarked by what I assume would be the rampant foot traffic that would soon occupy it.”
Kalshi + sports hedging: Here’s what CEO Tarek Mansour posted on Twitter about a deal to allow a sports insurance broker to trade on Kalshi:
On sports hedging. The sports insurance and re-insurance industry is big: the annual market is around $9 billion and is projected to double by 2030. There are a variety of insurance products including brand sponsorships, game cancellations, team/player performance, off player compensation, and more.
We just announced a partnership with sports insurance broker Game Point Capital.
Game point capital issues hundreds of millions in sports insurance per year. Their most popular product is team and player performance bonus insurance: sports teams often structure large payouts to coaches and players that get triggered if they achieve certain milestones (winning championship, making the playoffs, scoring records, etc.). The bill is often large and teams smooth out their finances by hedging it.
Game Point hedged for two different teams against performance bonuses on basketball with Kalshi last week:
1. One is a hedge for a bonus if the team makes the post-season (Kalshi price=6%, OTC price ~ 12-13%)
2. One is a hedge for a bonus if the team advances to the second round (price= 2%, OTC price ~7-8%).
Why did they do this on Kalshi?
Insurers like Game Point need to offload the risk they take on somewhere else. Typically, they go to traditional re-insurance companies like Lloyd's of London, which is Over-the-counter (OTC): you negotiate price and terms 1:1 with them (instead of an open/competitive market).
Like in all OTC markets, the issue is the re-insurers are restrictive in what risks they take: they like to avoid volatile, higher risk contracts, so they offer prices that are opaque and prohibitively high. Exchanges are a better alternative because they expand liquidity and bring competition: multiple counterparties compete in an open marketplace to improve the price.
Exchanges are harder to build than OTC because they need to have enough liquidity. Over the past year, we’ve massively increased the liquidity on our sports markets. During the Super Bowl, Kalshi could have processed a $22 million trade without moving the price meaningfully.
At this level of liquidity, Kalshi is now very attractive for Game Point and other similar companies: there’s more liquidity available, it's cheaper, and the price is more transparent. We expect to process tens of millions in similar hedges from Game Point alone in the coming months.
Onwards.
💡My take: Some of this is being done, I suspect, just to prove that sports event contracts have an economic purpose. The primary purpose for most of the markets is letting people gamble, of course, but there are at least a subset of markets that can be useful for hedging. Even at “tens of millions” in volume, that’s a drop in the bucket vis a vis current activity at Kalshi. Things like game cancellations are, of course, extremely good examples, but they haven’t been listed. I’ll be interested to see if sports markets are stood up particularly for the purposes of insurance/hedging.
And sorry, not sorry, this is too funny to me not to share:
Sports Projections@Sports__Proj@mansourtarek_ Well said, Tarek. I run a small family shop competing with Game Point Capital and recently used “combos” to hedge a South Korean basketball regular season result + a Tajikistan table tennis first-to-5 prop a client left us exposed on. Love what you’re building - keep pushing.12:23 AM · Feb 13, 2026 · 4.07K Views3 Replies · 4 Reposts · 80 Likes
Prediction Markets Aren’t Taking Share from Legal Sports Betting, Says ARK (Casino.org): “Prediction markets notched massive turnover increases over the course of the 2025 NFL season, culminating in sizable volume spikes on Super Bowl Sunday, but yes/no exchanges still aren’t stealing significant market share from regulated sportsbook operators.”
“That’s the take of ARK Investment Management analyst Nick Grous who in a new note points out that prediction markets such as Kalshi are engaging in ‘regulatory arbitrage.’ Translation: Those companies are capitalizing on their status as federally regulated entities to provide access to sports wagering in states where that activity isn’t legal.”
“Today, roughly 30 to 32 states, representing about 40% of the US population, do not have legalized online sports betting,” observes the ARK analyst. “For residents in those states, prediction markets offer something simple. Access.”
Prediction markets might have played role in reduced Nevada Super Bowl handle (CDC Gaming): Jeffrey Benson, director of operations for Circa Sports, cited “prediction markets, exchanges, and the continued legalization of sports betting” as the reason handle was down.
Nevada sportsbooks see lowest Super Bowl betting in a decade. Prediction markets to blame? (Nevada Independent): “Nevada sportsbooks reported their lowest collective wagering totals on the Super Bowl in 10 years, according to data released late Monday by the Gaming Control Board. The announcement led some analysts to speculate that prediction markets had taken away wagers that normally would have made it into Nevada casino coffers.”
FiscalNote Announces Major Expansion Into Political Prediction Markets (press release): “FiscalNote Holdings, Inc. (NYSE: NOTE), a global leader in AI-driven policy and regulatory intelligence, today announced a major expansion into the rapidly growing political prediction market, a category attracting increased attention as interest in outcome-based forecasting accelerates. The Company has introduced a preview experience at PoliticalPredictions.com, highlighting its plans to establish a presence across multiple layers of the political prediction ecosystem, leveraging the Company’s distinctive portfolio of relevant datasets, advanced AI capabilities, policy-focused customers, and deep domain expertise.”
“Prediction markets are rapidly emerging as a powerful new way to understand, anticipate, and engage with outcomes across a wide range of domains,” said Josh Resnik, President & CEO of FiscalNote. “As public interest in politics and policy decisions accelerates, this category is poised to reshape how political insight is formed, shared, and acted upon, extending well beyond traditional audiences. With this expansion into prediction markets, FiscalNote is positioning itself to define this space over time, bringing its policy intelligence, data sets, and expertise into a category that is still taking shape. We see a significant opportunity to build new, differentiated businesses at the intersection of policy, data, and public decision-making.”
AI-Focused Prediction Market Exchange PMEX Files for CFTC Approval (DeFi Rate): “A new prediction market exchange applicant has entered the Commodity Futures Trading Commission’s regulatory pipeline, with PMEX Markets listed as a pending Designated Contract Market (DCM) in a filing dated Feb. 9 on the agency’s trading organization portal. The filing is tied to Pluto, a venture-backed startup aiming to build financial markets around artificial intelligence infrastructure costs, according to CEO Ronit Jain.”
“Jain confirmed to DeFi Rate that PMEX Markets is the regulated exchange entity for Pluto, formerly known as Strike, and that the company is also pursuing approval for PMEX Clearing, a related clearing organization.”
