DraftKings Conference: Execs Debate Prediction Markets, Regulation and Sportsbook Edge

Key Points

• Prediction markets are being used as an additional "mosaic" input for investment and sentiment signals—Robinhood treats them as a timely, complementary data point rather than a standalone trading signal.
• Sports dominate prediction-market volume (roughly 70–80%), and DraftKings says traditional sportsbooks still deliver a better consumer experience even as it competes to expand prediction-market engagement across all 50 states.
• Integrity and regulation are central concerns: regulated exchanges implement surveillance, KYC and contract limits, and panelists called for clearer agency guidance and enforcement to address problematic contracts and insider or manipulative activity.

Panelists at a Milken Institute session moderated by Axios Business Editor Dan Primack outlined how prediction markets are being used as investing and engagement tools, while also debating how these markets differ from traditional sportsbooks and what regulatory and integrity issues could shape their growth.

How Robinhood uses prediction markets as an investing input

Stephanie Guild, chief investment officer at Robinhood, said she uses prediction markets as “part of a mosaic” in investment analysis rather than as a standalone signal. Guild pointed to market expectations around events such as Federal Reserve decisions as well as company-specific questions like whether Palantir will beat earnings as examples of where prediction-market pricing can offer an additional data point.

Guild said she does not give prediction markets more weight than traditional indicators, but described them as useful for gauging sentiment and expectations—an important factor in market reactions to earnings. “Expectations are everything when it comes to investing,” she said, adding that markets can punish even “amazing earnings” if results do not clear what investors had already priced in.

Guild also argued that faster-moving sources of information, including social platforms and podcasts, can combine with prediction markets to produce timelier signals than “institutional research,” which she said can feel “a little slow” relative to how quickly markets move.

A “dispassionate” market-based signal—at least in theory

Brian Quintenz, a former commissioner at the Commodity Futures Trading Commission (CFTC) and a board member of the Kalshi Exchange and its clearinghouse, framed prediction markets as a way to produce a market-driven, “dispassionate view” of the likelihood of future events. Quintenz said he places higher value on market-based information than survey-based information because participants must size their convictions in dollars rather than simply express opinions.

Primack pressed Quintenz on whether markets actually remain dispassionate when participants may bet on what they want to happen, particularly in elections or sports. Quintenz said a derivatives market aggregates different motivations—including risk hedging, fundamental analysis, and emotional participation—into a price that can self-correct through arbitrage if it becomes “out of whack.”

Guild added that prediction markets can function as an “emotional hedge,” offering an example of a local election where a participant might bet against their preferred outcome to soften the sting if their candidate loses.

Sports dominates volume, and sportsbooks still compete on experience

Primack noted that sports appears to drive much of the activity in prediction markets. Quintenz said Kalshi’s sports share has declined “from the high 80s to about 70” percent of volume, attributing that to the sheer number of sporting events, and predicted election-related volume could expand as midterms approach.

Paul Liberman, co-founder and president of operations at DraftKings NASDAQ: DKNG, said sports may be “the only one that’s not completely dispassionate” because of fan loyalty, while still functioning as a useful barometer for likely outcomes. Liberman said DraftKings sees value in sports prediction-market data that can help it operate both as a sportsbook and in prediction markets.

Liberman also addressed why DraftKings supports the growth of prediction markets even though they can enable sports-event trading in states without legal sports betting. He said prediction markets can expand consumer engagement “across all 50 states” and provide more product opportunities, including for customers interested in predicting elections or crypto-related outcomes.

When asked to choose between a future where a state allows either sportsbooks or prediction markets, but not both, Liberman said sportsbooks provide a “better consumer experience” for sports. He cited customer preference in sportsbook jurisdictions and noted that sportsbooks can offer promotions and reinvestment that can be “really challenging” in prediction markets. Still, he said DraftKings is “really happy to compete in the prediction market space.”

Speculation vs. gambling and the role of regulation

Primack repeatedly challenged the distinction between sports betting and sports-event contracts on prediction markets. Quintenz argued that speculation in financial markets differs from gambling because derivatives can provide price discovery and risk-management tools beyond the wager itself, while also emphasizing that Congress created the legal framework and that regulators should not impose “merit-based” value judgments.

Liberman said that, in practice, prediction-market participants are often trading against sophisticated market participants such as “a market maker or a sharp,” noting that the speed of sports markets favors API-driven activity on the other side. He added that if prices diverge meaningfully between sportsbooks and prediction markets, arbitrage would likely close the gap, leading to broadly similar pricing.

Guild said Robinhood already offers sports event contracts and described them as popular, while noting that sports contracts are not yet used in Robinhood-managed portfolios. She said adding prediction markets into managed strategies would require additional infrastructure and could be on a longer-term roadmap, potentially within “the next year or 2.” She highlighted the concept of using prediction markets as hedges for risks that are hard to model with traditional instruments.

Integrity, insider information, and contract limits

The panel also discussed integrity and reputational questions, including scrutiny around offshore, unregulated venues. Quintenz said there is “a lot of confusion” between what happens on “offshore unregulated exchanges” and what occurs on federally regulated venues like Kalshi, emphasizing that rules already restrict certain contracts and require surveillance, know-your-customer standards, and measures designed to prevent wash trading and insider activity.

Quintenz said contracts involving “war, terrorism, assassination, death” would be viewed by the CFTC as contrary to the public interest because they could incentivize harm. He added that event-contract settlement criteria require “very close attention,” and suggested clearer agency guidance or rulemaking may be needed for contracts tied to individuals whose status could change due to assassination or other harm.

On enforcement, Quintenz said that during his time at the CFTC, investigations before commissioners voted on cases often took “2 to 3 years.” He also noted that exchanges may impose rules beyond federal requirements, citing Kalshi’s recent action to fine and ban three election candidates who wagered on themselves.

Liberman said DraftKings has an integrity team focused on sports integrity monitoring, works with leagues and law enforcement, and uses artificial intelligence to identify anomalous behavior. He argued regulated markets provide data that can help detect issues that previously occurred in black markets without being caught.

Asked about political and regulatory risk, Guild said Robinhood considers changing rules “across the board,” including in crypto and broader market structure, and said the company aims to operate safely and not merely “to the letter of the law.” Quintenz said laws are difficult to change and typically require significant public outrage to galvanize legislative action.

In closing, the panelists described prediction markets as a probabilistic signal rather than a binary oracle. Liberman said prediction markets provide probabilities that should be treated as “a data point,” a view Quintenz echoed. Guild said she would not rely on prediction markets “100%” for a major personal decision, but would incorporate them alongside other work.

About DraftKings NASDAQ: DKNG

DraftKings Inc is a leading digital sports entertainment and gaming company specializing in daily fantasy sports, sports betting and iGaming products. The company provides an integrated platform where users can participate in daily fantasy contests, place wagers on professional sports events, and enjoy a range of online casino-style games. DraftKings' proprietary technology supports real-time odds, live scoring and advanced analytics to enhance the user experience across mobile and desktop applications.

Founded in 2012 by co-founders Jason Robins, Matthew Kalish and Paul Liberman, DraftKings began as a daily fantasy sports provider and rapidly expanded into regulated sports betting following legislative changes in the United States.

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