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DraftKings launched DKeX this week, its own prediction market exchange.
Until now, DraftKings ran its prediction business on partner infrastructure. CME Group cleared the trades, and Crypto[dot]com supplied and managed the markets. Both took a cut of every trade.
This week, DraftKings cut out both middlemen. The licence to do it came from Railbird Technologies, the CFTC-regulated exchange they bought back in October 2025. Trades now clear on DraftKings' own book.
Why did they do this?
Well, on someone else's exchange, the venue keeps a slice of every trade. On your own book, you keep the lot: taker fees of $0.005 to $0.01 per contract, maker fees of $0.0025, and the spread.
Citizens analyst Jordan Bender models $243 million in market-making revenue by 2027, at gross margins approaching 95%.
This comes at a moment when DraftKings' prediction division recently topped $3 billion in annualised consumer volume, and over 30% of customers already use their parlay-style Predictions Combos.
This is a broader pattern that we now see industry-wide:
Robinhood built Rothera with Susquehanna
Polymarket buying QCEX (QCX + QC Clearing)
Crypto[dot]com took over the Nadex licence and rails
Kalshi has its own DCO(Kalshi Klear)
Underdog acquiring Aristotle’s DCM/DCO
Coinbase acquired The Clearing Company
Flutter is running a dual-broker setup
All are moves away from renting infrastructure, towards owning it.
Building your own stack doesn’t come cheap.
DraftKings is treating this build as a loss leader in 2026.
They told investors that the incremental spending on Predictions (product build, liquidity, promos, marketing, regulation, etc.) will knock $200–$300 million off 2026 EBITDA
Bank of America think it could reach $550 million.
Prediction markets like Kalshi and Polymarket are not limited to sports; they also list markets on songs, weather, elections and box-office numbers.
In this case, the song by Malcolm Todd, 'Earrings', hit Number One on Spotify's daily US chart on a Monday.
That chart is a list of the most-streamed songs in the country on a given day, traders on Kalshi now put money on where those songs will land.
Within days, Spotify had stripped roughly 500,000 streams from it and confirmed the numbers were fraudulent.
A big chunk of those plays turned out not to be real fans hitting play, but artificial streams.
This huge case of alleged fraud was not caught by a label, nor by Spotify. It was caught by a trader called Caleb Davies, who trades music charts, and flagged the song's jump from Number Four to Number One, a 70% one-day climb.
What did he see?
Set against normal chart movement, the jump was an 11.24 sigma event. Roughly a 1 in 77 octillion chance of it happening naturally.
The inflated streams had already settled a Kalshi market on June's most-streamed US song, one that took about $3 million in trades.
Spotify say they are adding checks to the charts before publication. Kalshi say they are actively investigating.
Senators Adam Schiff and John Curtis introduced the Prediction Markets Are Gambling Act, the first bipartisan Senate bill aimed at the sector.
It would ban CFTC-registered exchanges from listing any contract that functions as a sports bet or a casino-style game.
Sports are this sector's current breadwinner, and the numbers in the bill's crosshairs are not small.
Super Bowl trading on prediction markets passed $1 billion this year, and a single March Madness winner contract did over $100 million. Those contracts trade in all 50 states, including states where sports betting is illegal, and generate no state, tribal or public revenue.
The bill landed in the same week Nevada won a temporary court order stopping sports wagering on Kalshi, and Michigan ordered Kalshi to stop operating in the state entirely. A separate House bill would ban members of Congress and their families from prediction markets altogether.
🗞 General
Prediction markets hit $24 billion a month, and US states are fighting back (Read more here)
The World Cup sends prediction market volumes to record highs (Read more here)
A mystery Polymarket bettor stakes around $400,000 on Putin leaving power this year (Read more here)
CNBC: most prediction market contracts have low volume, leaving users exposed to volatility and bots (Read more here)
Online prediction market traders make millions betting on US military operations (Read more here)
Wagering on wildfires: there is a prediction market for that now (Read more here)
The original prediction market boosters have qualms about the boom (Read more here)
Bernstein: Kalshi and Polymarket could become M&A targets as the sector consolidates (Read more here)
Americans traded $571 million on Polymarket politics bets despite the US ban (Read more here)
🤝 Announcements & Partnerships
Solana's mystery project World unveiled as a fully onchain prediction market (Read more here)
Cboe seek to list prediction-market-style options on earnings metrics (Read more here)
Polymarket debuts its first brand campaign, with Rick Rubin (Read more here)
Kalshi and ADI Predictstreet partner on co-branded World Cup spots (Read more here)
Prediction markets emerge in Japan, with shopping vouchers (Read more here)
Prediction markets head to Canada (Read more here)
💰 Funding & M&A
Meta discussed acquiring Kalshi before building their own app, but talks didn't advance (Read more here)
Adjacent raised $2.5M pre-seed for prediction market indices, with DCG and VanEck in (Read more here)
Kalshi seek a $40B valuation as the CEO rules out an IPO before 2027 (Read more here)
⚖️ Regulation & Legal
Nevada wins a temporary ban on sports wagering via Kalshi (Read more here)
Kalshi was ordered to stop operating in Michigan (Read more here)
Kalshi sue Illinois over its push to tax sports bets (Read more here)
A federal judge weighs the future of Minnesota's prediction market ban (Read more here)
The EU moves to block retail investors from prediction markets (Read more here)
Bipartisan senators call for a CFTC investigation of Polymarket over staged promotions (Read more here)
A House bill would ban politicians and federal candidates from prediction markets (Read more here)
Kalshi face scrutiny over a $300,000 share gift to Donald Trump Jr. (Read more here)
The SEC opens an ETF rule review as prediction markets push in (Read more here)
Michigan's regulator quits the problem-gambling council over its Kalshi partnership (Read more here)
Disclaimers
This newsletter is for informational purposes only and is not financial, business or legal advice. These are the author's thoughts & opinions and do not represent the opinions of any other person, business, entity or sponsor. Any companies, platforms, markets or projects mentioned are for illustrative purposes unless specified.
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When you trade on prediction markets (including event contracts, opinion markets and other speculative instruments) your capital is at risk. Risks include price volatility, loss of capital, illiquidity, complexity, evolving regulation and lack of protection. Many prediction market operators do not currently operate in a fully regulated industry, and availability varies by jurisdiction. You may not be protected under financial compensation schemes typically afforded to investors dealing with regulated entities. Nothing in this newsletter constitutes a recommendation to place, hold, or close any position on any market.