DraftKings Is Expanding Its Prediction Market Offerings. Could This Send the Stock Soaring?

DraftKings (NASDAQ: DKNG) has been one of the most punished stocks in the market lately. After reporting 43% revenue growth, the company saw its stock fall sharply due to conservative 2026 guidance and concerns about competition from prediction markets.

But while Wall Street fixates on whether traditional sportsbook handles are peaking, DraftKings is working behind the scenes to assemble something much bigger. I think the market is missing it entirely.​

In February 2026, DraftKings announced a partnership with Crypto.com and the integration of Railbird Exchange, a designated contract market it acquired, to expand prediction offerings far beyond traditional sports.

The company is rolling out event contracts across culture, entertainment, politics, and additional sports categories, including player-specific markets through Railbird.

In its fourth quarter 2025 shareholder letter, CEO Jason Robins described Predictions as "the most exciting new growth opportunity we have seen since PASPA was struck down in 2018."

Image source: Getty Images.

I think DraftKings is separate from pure prediction market platforms because of its dual revenue model. The company plans to generate income from transaction fees on its customer-facing platform and from a proprietary market-making division launching this year.

DraftKings models sports probabilities daily through its sports betting book -- it has hundreds of data scientists, machine learning engineers, and a dedicated trading desk fine-tuning live pricing in real time. That infrastructure is now being repurposed to provide liquidity across prediction market contracts, giving DraftKings an edge that a start-up exchange simply doesn't have.​

In other words, DraftKings stands out to me because it has its own market-making arm, and it already uses it to power its real-time sportsbook odds. It can use this arm to strengthen its prediction features and snatch some of Polymarket and Kalshi's customer base.

Will Predictions send DraftKings soaring?

Perhaps the most under-appreciated aspect of this push is geography. DraftKings Predictions operates in 38 states, including massive non-sportsbook markets like California and Texas.

Traditional online sports betting is available in just 26 states. Predictions unlock access to roughly 40% of the U.S. population that has been off-limits to DraftKings' core business.​

The 2026 revenue guidance of $6.5 billion to $6.9 billion disappointed analysts, who expected roughly $7.3 billion. J.P. Morgan warned that investors see the lowered target "more as a tacit admission of industry growth concerns than a beatable target."

That's a legitimate concern. But DraftKings did exclude Predictions revenue from its guidance, meaning any contribution is pure upside.

Robins has projected that Predictions could generate up to $10 billion in gross revenue over time. Even capturing a modest share of that opportunity could meaningfully rerate a stock currently trading near its 52-week low.

I don't think Predictions alone can send the stock soaring, but it has the potential to reinforce an already established household name in the gambling and forecasting space. This stock seems to be a very safe buy.

Micah Zimmerman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.