DraftKings sells sports event contracts in the 18 states where it has no online sportsbook, and in none of the 27 where it does. That geography lets the company tell investors the products don't compete, tell the NFL its advertising never crosses league rules, and tell fans the service is available in all 50 states.
On the DraftKings availability page, each state falls into exactly one list. 'Online sports betting' covers 27 states plus Washington DC and Puerto Rico. 'Prediction markets' covers 18 states, including California, Texas, Georgia and Florida, where legal online sportsbooks don't exist. The remaining five get free contests only.
The company separates the products deliberately. The Predictions app launched in December in 38 states, but sports contracts appeared only where the sportsbook doesn't operate. That matters for three reasons. First, the NFL partnership: the league bars prediction-market advertising at games, stadiums and in team deals. Since DraftKings has no prediction clients in sportsbook states, the rule costs nothing. Second, regulators. An August campaign offering a $200 bonus for a first $5 trade targeted the four largest states without legal sportsbooks. Third, investors. CEO Jason Robins said the products don't cannibalize each other: customer overlap between the DraftKings sportsbook and the largest prediction operator in sportsbook states is around 1%, and 80–90% of prediction volume in those states comes from professional syndicates and institutional traders.
Annualized trading volume grew from $2.3bn in April to $11bn in July, of which around $3.6bn is consumer volume and $7.4bn is market-makers. Consumer trades run around $300m per month. In Q2, Sports revenue fell 10.6% to $892m as handle grew 14.5% to $13.14bn. Hold dropped from 8.7% to 6.8%. The company attributed the decline to unfavorable sports outcomes ($80m) and customer acquisition costs, but did not disclose how much predictions contributed to total revenue.
The entire structure rests on a question the Supreme Court will decide: whether a contract on the Cowboys spread, sold in Texas, is a sports bet. The Ninth and Third circuits answered differently, and New Jersey has asked the high court to settle it. The DraftKings map assumes the answer is no.
