In a bold move to diversify beyond traditional sports betting, DraftKings has launched a new suite of "yes/no" prediction markets centered around high-profile NFL and NBA players. What this really means is that DraftKings is doubling down on the emerging world of prediction markets, offering customers the ability to speculate on whether specific athletes will achieve certain performance milestones or hit personal statistical benchmarks.
Cashing In on Player Prop Bets
The new DraftKings Predictions platform allows users to essentially "buy" or "sell" shares tied to binary outcomes for player stats and achievements. For example, you could purchase a contract that pays out if LeBron James scores over 25 points in his next game, or sell a contract betting he'll fall short. The bigger picture here is that DraftKings sees these player-focused prediction markets as a way to capitalize on the growing popularity of "prop bets" - wagers on individual player or team performance metrics rather than just game outcomes.
Tapping Into Sports Fandom
By letting users speculate on the exploits of their favorite stars, DraftKings is essentially turning hardcore sports fans into would-be Wall Street traders. Reuters reports that the company views these prediction markets as a way to "further tap into the passion of the sports fan" and drive engagement beyond traditional sports betting. In theory, die-hard basketball or football fans will be lured in by the chance to profit off their encyclopedic knowledge of player stats and tendencies.
Regulatory Hurdles Ahead
Of course, the rise of player-focused prediction markets also raises some thorny regulatory questions. The Commodity Futures Trading Commission, which oversees these types of financial instruments, will need to carefully scrutinize DraftKings' new offerings to ensure they don't cross any lines or enable insider trading. And in states where traditional sports betting is still limited, lawmakers will have to decide whether to permit these prediction market products.
The bottom line is that DraftKings is betting big that the thrill of speculating on star players will be the next big thing in the world of sports fandom and gambling. Whether regulators and lawmakers give the company free rein remains to be seen.