DraftKings Launches Prediction Markets Making Division Amid Fee Generation Issues

DraftKings has taken a major step into prediction markets with the launch of DKeX, its in-house market-making division.

The rollout came during the FIFA World Cup knockout stage, one of the busiest periods on the sporting calendar. However, this allows DraftKings to expand its prediction market offering before the NFL regular season returns later this year.

DKeX provides pricing, liquidity and trading infrastructure for DraftKings Predictions, the company’s federally-regulated prediction market platform. Now the company can manage a larger share of the trading process itself without relying entirely on external partners.

Chief Executive Officer Jason Robins believes the company’s experience in odds compilation, pricing models and quantitative analysis gives it a strong foundation.

“DKeX provides a vertically integrated foundation for DraftKings Predictions, strengthening our prediction markets content and capabilities, giving us greater control over the technology that powers those offerings, and enabling us to move faster as we continue enhancing our unified app,” he wrote in a statement.

The launch also supports DraftKings’ wider strategy of integrating prediction markets into its Super App, bringing sportsbook, casino, fantasy sports and prediction products together on one platform.

Trading Fees Create New Revenue Opportunity 

DraftKings entered prediction markets last December through DraftKings Predictions, which operates under the US Commodity Futures Trading Commission’s oversight.

While the launch expanded the company’s product offering, it also showed a limitation. Existing partnerships with CME Group and Crypto.com meant DraftKings did not capture the full value generated through exchange trading fees. But this changes with DKeX.

Market makers earn revenue by supplying liquidity to exchanges, collecting trading fees and benefiting from the spread between buying and selling prices. These businesses are key to keeping markets active by ensuring orders are always available for participants to trade against.

DraftKings has introduced a fee structure similar to those used by other major prediction market operators. Market takers will pay between $0.01 and $0.02 per contract depending on contract pricing, while market makers will be charged a lower fee of $0.0025 per contract.

The structure mirrors approaches adopted by competitors such as Kalshi and Polymarket, both heavily invested in building liquidity across their exchanges. For DraftKings, internalising this part of the trading process creates a previously unavailable extra revenue stream.

Investment Costs Raise Questions For Analysts

DraftKings has warned investors that its prediction market business could generate losses of between $200 million and $300 million during 2026 as it builds infrastructure, develops technology and attracts users.

Some analysts believe those estimates may still prove conservative. According to Bloomberg, Bank of America projects losses could eventually reach as much as $550 million before the business reaches greater scale.

The main question is whether future trading fees can offset those investments. Citizens analyst Jordan Bender believes market making could become one of DraftKings’ most profitable businesses, with gross margins up to 95%.

Citizens estimates DraftKings could generate approximately $243 million in market making revenue during 2027, providing long-term contributions to EBITDA if customer adoption keeps growing.

Prediction Markets Keep Attracting Industry-wide Investment

Following the DKeX announcement, DraftKings shares climbed roughly 11% to about $27.59. This shows that investor confidence remains strong. Although the stocks are well below pre-2025 Super Bowl levels, some analysts believe the exchange business could help with recovery.

The launch also comes as prediction markets attract record valuations. Kalshi recently indicated it is pursuing another funding round to value the company at $40 billion after a $22 billion valuation earlier this year.

Analysts at Bernstein believe vertically integrated businesses combining exchanges, market making and consumer platforms could become more attractive acquisition targets.

DraftKings has launched a market-making division, DkeX, to support its prediction market platform. This business model is expected to provide extra revenue, which should slightly mitigate the projected losses between $200 to $300 million from building DraftKings Predictions. The company’s share prices have risen by 11% following the DkeX announcement.