DraftKings President of Operations Paul Liberman would prefer a world in which sports betting is legal in all 50 states. For now, the company has a solution via prediction markets, and he expects the sports event contracts product to look increasingly like a sportsbook.
Liberman was a panelist alongside Kalshi board member Brian Quintenz and Robinhood Chief Investment Officer Stephanie Guild at the 29th Annual Milken Institute Global Conference on Monday.
“We do see a lot of value and a lot of data coming out of the sports prediction markets that is helping us as a sportsbook operate, and as a sports prediction market,” Liberman said. “Ultimately, we think that this allows for our consumers to engage in, whether it is sports betting or trading on their derivative products, across all 50 states. What we were excited about is opening up the opportunity for more customers and more products. Lots of our customers are also very passionate about predicting election outcomes or predicting crypto futures.”
Are microbetting markets next?
DraftKings is one of several online gaming operators to have jumped into offering sports event contracts, along with FanDuel, Fanatics, PrizePicks, Underdog, and others. Meanwhile, Kalshi, Robinhood, Polymarket, Crypto.com, Coinbase, and several other financial platforms have expanded into sports.
Does Liberman see a world in which things flow the other way and prediction platforms get into state-regulated sportsbooks? “I certainly think they may try,” said the DraftKings President.
In the meantime, when asked to suggest one product enhancement that he expects will or should come down the road for prediction markets, Liberman suggested that expanding into microbet-style markets is likely.
“Prediction markets have been amazingly quick at innovating and adding categories, really, really quickly,” he noted. “I think that in sports, we’re gonna see faster, more dynamic micro markets appear that don’t exist yet. We’ve seen that already with RFQs and parlays.
“I think you’re gonna continue to see innovation there in terms of how dynamic the prediction markets are gonna be able to be on sports.”
DraftKings made an entry into the microbetting market in 2024 by acquiring Simplebet for nearly $200 million.
Why is trading on the Celtics not sports betting?
During the hour-long panel, Primack quizzed Liberman and Quintenz on what the true difference is between sports betting and sports contract trading.
“Give me the basic argument for why, I bet on the Red Sox on Kalshi, that’s not sports gambling, philosophically,” Primack asked Quintenz.
“Look, people have been calling engagement and trading and investing in the financial markets gambling for decades, if not centuries, right?” replied Quintenz, who was at one time President Donald Trump’s nominee to be the new chairman of the Commodity Futures Trading Commission (CFTC) before Michael Selig was ultimately confirmed.
Quintenz stressed that he believes that federally regulated prediction markets are a “fundamentally different model” from sportsbooks.
“I think we have to be a little careful with how we think about what that really means,” he added. “I think there’s a difference between speculation and gambling. Speculation in the financial markets is wagering or trading where there is more of an economic impact than just the money that is being traded, right? … Is anyone gonna sit here and tell me that there is no economic, financial, or commercial consequence to who wins or loses the Super Bowl?”
Liberman is listed as a manager of DraftKings Predictions, the prediction markets platform launched last December that offers event contracts trading in 48 states, including sports contracts in 18 states where DraftKings Sportsbook cannot offer online sports betting.
For his part, the executive stressed that a sports event contract is still “a derivative”, but he acknowledged that, for the end user, putting a bet on the sportsbook or trading on the Celtics “definitely feel[s] as though it’s the same.”
“That being said, there is a place where prediction markets have their value as well in sports,” Liberman added. “I think both are actually really positive and that’s why we engage on both sides. They’re both great. They’re different. They have their different values.”
Sports betting still No. 1 pick for DraftKings
One of the states in which DraftKings Predictions can offer sports but DraftKings Sportsbook cannot is California, where lawmakers and tribal entities have pushed back notably in court and in public against prediction market expansion into sports.
At one stage of the discussion, Axios editor Dan Primack asked Liberman to answer one hypothetical: If DraftKings could choose to offer either state-regulated sports betting or sports event contracts in California, what would it pick?
“What we have found is that sportsbooks offer, for sports, a better consumer experience than prediction markets overall,” Liberman replied. “For our customers that are in sportsbook jurisdictions, they prefer to still do business with a sportsbook. We’ve done a lot of surveys. We know that we are able to give them promotions and offers, and it’s a more engaging experience overall.
“We would prefer that sportsbooks would still be the lead. That being said, we’re also really happy to compete in the prediction market space.”
DraftKings wants federal ruling on sports prediction markets
As for what might be next for sports prediction markets, Robinhood’s Guild acknowledged that without a firm government ruling or a Supreme Court decision on sports event contract legality, things could change drastically in the future, particularly if there is a change of federal government administration.
“It’s something we think about all the time,” she said. “We try to weigh the probability of that happening. I think that might come sooner. We’ll see what happens with the midterms, but that could change the nature of how laws get done in the second half of this administration. I think it’s always in the back of our minds that the pendulum can swing in the other way.”
Liberman, too, suggested that DraftKings is not sure exactly what is going to happen.
“Ultimately, with DraftKings, if we can participate in the different states, we are going to participate, and we would love to offer the products wherever we can pass legislation,” he added. “We are pro the federal government taking a more active stance and saying, ‘Sports is legal and accepted, and we can do it as a prediction market.'”
