DraftKings is expanding its prediction-market business through DKeX, which ranked third in trading volume.
- DraftKings plans to invest more in prediction markets, with DKeX targeting $1 billion in trading volume by December.
- However, Kalshi currently dominates sports prediction-market volume, creating competitive pressure.
- U.S. lawmakers are investigating prediction platforms over concerns about insider trading and compliance.
DraftKings (DKNG) stock is headed for its worst month since January, down over 19% in September, as Brazil’s betting ban and a widening House insider-trading probe weigh on the online betting sector. But the company’s expanding DKeX prediction-market business is emerging as a potentially important growth driver, keeping retail traders engaged despite the broader selloff as it competes with Kalshi and Polymarket.
DraftKings stock inched 0.3% higher overnight, ahead of Wednesday. The stock has declined 11% so far this week.
DraftKings DKeX Gains Ground In Prediction Markets
DraftKings has been planning to increase its prediction market investment in the second half of 2026. Wall Street is punishing the stock for sector-wide regulatory noise, while retail investors are treating the pullback as a chance to buy into the company’s push beyond traditional sportsbooks.
“Our core business remains on track to generate approximately $1 billion of Adjusted EBITDA this year, providing us with financial flexibility to invest behind the significant opportunity that we are seeing in Predictions,” said Alan Ellingson, DraftKings’ CFO, during second-quarter earnings.
According to a CNBC report, analysts say uncertainty over how prediction markets will be regulated could keep the DKNG stock volatile. However, some see potential in DraftKings’ prediction exchange, DKeX, which ranked third in prediction-market trading volume behind Polymarket and Kalshi in the third week of September.
Bernstein estimates DKeX could reach $1 billion in consumer trading volume by December. Investors are closely watching its performance during the fall football season and upcoming basketball and hockey seasons to see whether the platform can maintain its growth.
However, according to an Investing.com report, Needham’s sports volume data showed that Kalshi handled 76% of sports prediction-market trading in the NFL’s opening week, while DraftKings’ DKeX accounted for 3%.
U.S. Lawmakers Probe Prediction Platforms
On Tuesday, House Oversight Committee Chair James Comer sent letters to the CEOs of Hyperliquid Labs, Crypto.com and Aristotle Exchange Inc., which owns PredictIt. Comer said the committee is investigating “whether these platforms are fulfilling their legal obligations and doing enough to identify and prevent insider trading before it happens.”
“As online prediction platforms grow and become more mainstream, some bad actors have exploited the platforms to make thousands of dollars by placing bets based on nonpublic information.”
Overseas, Brazil’s ban on online sports betting took effect Sept. 25. Flutter Entertainment (FLUT), which owns FanDuel, halted its Brazil betting and iGaming operations. The order needs congressional approval within 120 days, and Flutter estimated a prolonged shutdown could cost about $70 million in 2026 revenue.
What DKNG Retail Traders Are Saying
On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory.
A user said, “Buy Zone. Hedge Funds are manipulating the chit out of this stock. Probably trading at about 12x 2027 earnings now with solid growth. Even Cramer was pumping in the upper 20’s. Rating this an Xtra Super Duper Strong Buy!!”
Another user said, “On Sunday, September 27, DKeX processed about 196.5 million in volime. This topped its prior single day high of 183.5million (from the previous NFL Sunday / Week 2). DKeX on pace for $27.5 billion annualized volume according to CEO. At 2.5% rate that would generate $687.5M in revenue. At 3% $825M in revenue.
OSB handle up 15% for the month of September compared to last year and Draftkings is regaining significant market share in iGaming. The price movement is really unexplainable. The only explanation for this going down is because it is trading in sympathy with Flutter who is losing market share like crazy and possibly going to take a huge hit in revenue with their investment in Brazil. And they are way behind when it comes to predictions, whereas Draftkings is already #3 in market share with only operating in 18 states with DKeX. Time for Draftkings to stop trading in sync with Flutter!”
A third user remarked, “I’m taking a bath in this money pit right now. However, they obviously have enough to pay their executives with sizable bonuses. The balance sheet is healthy to afford that.”
DKNG stock has crashed 43% year-to-date.
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