DraftKings will spend as much as $250 million in total to buy prediction markets platform Railbird Exchange, Front Office Sports has learned.

Under the transaction, DraftKings is paying $50 million upfront, with an additional $200 million in performance incentives, the specifics of which are not clear, according to a source familiar with the deal. Financial details were not disclosed when DraftKings announced on Tuesday it was buying the upstart prediction markets platform. 

A DraftKings spokesperson tells FOS “we don’t comment on financials.”

The deal represented the latest in a flurry of recent prediction-market activity as the space continues to heat up. DraftKings has not committed to offering sports event contracts, which have gained notoriety but are controversial because of their similarity to sports betting. FanDuel in August reached a deal with derivatives exchange CME Group; there, the sports betting giant also chose not to commit to sports event contracts.

The entry of traditional sportsbooks into prediction markets is an acceleration for the space, which for the better part of this year has been dominated by two players, Kalshi and Polymarket, each of which recently raised money. Kalshi, which is fighting multiple court battles over its sports offerings and earlier this month raised $300 million at a $5 billion valuation, has reportedly received recent takeover interest valuing the business at more than $10 billion, Bloomberg reported Wednesday. Polymarket, meanwhile, will receive up to $2 billion from the operator of the New York Stock Exchange and is expected to relaunch in the U.S. imminently after having been previously barred from operating in the country since 2022.

Shayne Coplan, founder and CEO of Polymarket, said in a social media post Wednesday that Polymarket Clearing will be the “designated clearinghouse” for DraftKings. (A clearinghouse is a middleman entity that guarantees trades, manages risk, and ensures payments are made.)

The news comes the same day that the NHL announced multiyear deals for both Kalshi and Polymarket to be “official prediction markets partners” of the league. Under those agreements, both will receive access to proprietary NHL data and will gain the right to use NHL logos and other marks.

Not everyone was pleased with the news. Tim Buckley, senior VP of external affairs for the NCAA, tells FOS “sport integrity is paramount for the NCAA, and we are deeply concerned by unregulated and unprotected markets that pose a threat to competition integrity and student-athlete safety.”

“We will continue to analyze developments of this market and work with industry leaders to help ensure guardrails and regulations to protect NCAA competition, student-athletes, coaches and officials,” Buckley said.

The post DraftKings Is Paying Up to $250M for Prediction Market Railbird appeared first on Front Office Sports.