Prediction Markets Move Closer To Sports Betting As DraftKings Tests Parlay-Style Product

Prediction markets are moving deeper into territory once dominated by traditional sportsbooks, creating a new competitive and regulatory front in the US betting industry.

The trend has accelerated with the launch of DraftKings Combos, a feature within DraftKings Predictions that allows users to combine multiple event contracts into a single outcome-based position. While prediction markets are legally structured as event contracts rather than conventional wagers, the product design is increasingly familiar to sports bettors: users select multiple outcomes, link them together and receive a larger payout if every leg succeeds.

That structure closely resembles a sportsbook parlay, one of the most important revenue drivers in modern US sports betting. As a result, DraftKings Combos has become a clear example of how prediction markets are no longer operating as a separate niche. They are beginning to overlap with the customer experience, product mechanics and growth ambitions of regulated sportsbooks.

DraftKings Brings The Parlay Format To Event Contracts

DraftKings Predictions was introduced as a separate real-money prediction market product, operating around event contracts in areas such as sports, finance and culture. With Combos, DraftKings is pushing the product closer to sportsbook-style engagement.

The feature enables users to group multiple contracts into one combined position. In practice, that means a customer can choose outcomes across different sporting events, such as team results, totals or spreads, and link them into a single transaction. Every selection must be correct for the combo to pay out.

The importance of this format is clear. Parlays have become central to US sportsbook economics, delivering higher margins and stronger customer engagement than many single-event bets. By adapting a similar format for prediction markets, DraftKings is testing whether the same consumer behavior can be replicated under a different regulatory framework.

The move also reflects the company’s broader strategy. DraftKings has presented prediction markets as a meaningful sports-adjacent growth opportunity, particularly in states where online sports betting is not yet legal or where access remains restricted. The company has also indicated that sports predictions and sportsbook products are increasingly connected from a business perspective, even if they operate under different rules.

Why Prediction Markets Are Challenging Sportsbooks

The challenge to traditional sportsbooks comes from three areas: access, regulation and product design.

First, prediction markets may be available in states where online sports betting has not been legalized. That gives operators a possible route into major markets such as California, Texas or Georgia without waiting for state-level sports betting legislation. For sportsbook brands, this is highly attractive because those states represent some of the largest untapped audiences in the US.

Second, prediction markets are generally positioned as federally regulated derivatives products rather than state-regulated gambling products. This distinction is central to the current debate. Sportsbooks are licensed state by state, often paying high tax rates and complying with detailed gaming rules. Prediction market platforms argue that event contracts fall under federal commodities oversight, creating a separate legal pathway.

Third, the products themselves are becoming more similar. Early prediction markets were often simple yes-or-no propositions. The latest generation is moving toward moneyline-style markets, totals, spreads, player-related outcomes, live markets and multi-leg combinations. That makes them look and feel much more like sportsbook products, even if the legal terminology is different.

Rivals Are Entering The Same Space

DraftKings is not alone in treating prediction markets as a strategic priority. FanDuel has moved into the sector through a partnership with CME Group, while Fanatics has launched Fanatics Markets with Crypto.com’s derivatives infrastructure. Other platforms, including Kalshi, Polymarket and Robinhood-linked products, have also contributed to the rapid expansion of the category.

This wider movement shows that prediction markets are not a side experiment. Major betting and financial technology companies are positioning themselves before the regulatory framework is fully settled.

For established sportsbook operators, the logic is defensive as well as offensive. If prediction markets become a legal and scalable way to offer sports-related products in non-betting states, operators that stay outside the category risk losing customers to rivals. At the same time, early participation allows brands such as DraftKings and FanDuel to shape user behavior, liquidity and product expectations before the market matures.

Regulators Face A Difficult Boundary Question

The rapid convergence of prediction markets and sports betting has triggered scrutiny from regulators, state governments, tribal gaming groups and industry associations.

The central question is simple but difficult: when does an event contract become a sports bet?

Prediction market operators argue that users are trading contracts on the outcome of real-world events, not placing traditional bets. Critics argue that sports-related event contracts, particularly those based on game results or player performance, functionally mirror gambling and should be subject to state gaming laws.

The dispute matters because the US sports betting system is built around state control. States determine whether sports betting is legal, who can operate, how much tax is paid and what consumer protections apply. If federally regulated prediction markets can offer sports products nationwide, that model could be disrupted.

Gaming associations and tribal operators have warned that prediction markets may weaken state and tribal gaming compacts, reduce tax revenue and bypass responsible gambling protections. At the same time, federal regulators are being asked to clarify how far event contracts can go before they cross into prohibited gaming activity.

Sports Leagues Are Watching Closely

Sports leagues are also becoming more involved. For leagues, prediction markets create both commercial opportunities and integrity risks.

On one hand, official data partnerships and monitoring agreements could help leagues control how their events are traded. On the other hand, markets tied to player performance, officiating decisions, injuries or highly specific in-game moments could raise manipulation concerns.

This is why leagues are likely to push for limits on sensitive markets, stronger monitoring and official data usage. As prediction markets become more sports-focused, integrity protections will become a key condition for broader acceptance.

A Strategic Shift, Not A Short-Term Replacement

Prediction markets are not yet replacing traditional sportsbooks. Licensed sportsbooks still dominate legal online sports betting in states where they operate, and products such as same-game parlays, live betting and promotional offers remain powerful customer retention tools.

However, DraftKings Combos shows where the market may be heading. The most important development is not simply the launch of one new feature. It is the integration of sportsbook-style mechanics into prediction market infrastructure.

If regulators allow this model to continue expanding, prediction markets could become a parallel sports betting channel in the US. If courts, Congress or regulators impose tighter restrictions, the sector may be forced back into narrower financial and political event categories.

For now, the industry is entering a decisive phase. DraftKings Combos marks a visible step toward convergence, and the outcome of the regulatory fight will help determine whether prediction markets become a lasting part of the US sports betting ecosystem or remain a contested alternative on its edge.