DraftKings Ends Credit Card Deposits, Faces Fine, & Bets Big on Prediction Markets – Breaking News
Boston, MA – In a significant shift for the online gambling industry, DraftKings announced today it will cease accepting credit card deposits for its sportsbook and casino operations across the United States, effective August 25, 2025. This decision comes on the heels of a $450,000 fine from the Massachusetts Gaming Commission (MGC) for previously accepting illegal credit card deposits, and as the company simultaneously pushes forward with plans to enter the burgeoning prediction market.
Credit Card Ban: Protecting Consumers or Damage Control?
DraftKings frames the move as a proactive step to protect customers from accruing high-interest debt and cash advance fees associated with credit card use. “DraftKings made a strategic decision to remove credit cards…as a means of deposit,” a company spokesperson told SIGMA News. Customers will still be able to fund their accounts via debit cards, bank transfers (ACH), PayPal, Venmo, and Apple Pay. However, the timing raises eyebrows. The MGC penalized DraftKings for accepting over $83,000 in unlawful credit card deposits in 2023 and 2024 – a direct violation of Massachusetts state law.
While DraftKings self-reported the violations and initiated a refund to 218 affected customers, regulators found that initial software fixes were insufficient. The company is now undergoing a third-party audit of its Massachusetts operations. Interestingly, a DraftKings spokesperson downplayed any connection between the fine and the broader credit card ban, stating it “didn’t affect” the decision. Similar bans are already in place in Tennessee, Iowa, New Hampshire, Oregon, Rhode Island, Vermont, and Illinois, demonstrating a growing trend towards restricting credit card access to gambling platforms.
The Rise of Prediction Markets: DraftKings’ Next Big Bet
Beyond the credit card controversy, DraftKings is aggressively pursuing a new avenue for growth: prediction markets. The company has filed an application with the National Futures Association (NFA) to operate as a swap company and introduction broker through GUS III HOLDINGS LLC. This move, while seemingly separate from the credit card issue, highlights DraftKings’ ambition to diversify its revenue streams and capitalize on emerging opportunities in the financial technology space.
This isn’t DraftKings’ first attempt. A previous application under GUS II Holdings was withdrawn. The current application boasts the backing of key executives, including CEO Jason Robins, CFO Alan Ellingson, and co-founder Paul Liberman. Robins has publicly stated the company is “actively considering entering the prediction market.” The potential for profit is substantial; Robinhood, which connects users to the Kalshi prediction market, processed $1 billion in transactions in Q2 2024, generating approximately $10 million in revenue.
Competition Heats Up in the Predictive Space
DraftKings isn’t alone in eyeing the prediction market. Competitor FanDuel has partnered with CME Group to launch a new event contract platform. Underdog and Prizepicks have also submitted applications, and Fanatics Betting & Gaming is making moves in the space. The NFA application process is rigorous, requiring thorough background checks and adherence to strict ethical standards. DraftKings is also reportedly exploring the acquisition of Railbird, a CFTC-approved prediction market platform.
Strong Q2 Earnings Despite Regulatory Headwinds
Despite the regulatory challenges, DraftKings reported strong second-quarter earnings, exceeding expectations with $1.13 billion in sales – a 37% year-over-year increase. Net income soared to $158 million, a significant improvement from $63.8 million in the same quarter last year. Adjusted EBITDA doubled to $31 million. This financial performance underscores DraftKings’ continued growth and market dominance, even amidst increased scrutiny.
DraftKings’ strategic pivot away from credit card deposits, coupled with its aggressive expansion into prediction markets, signals a dynamic shift in the company’s approach to risk management and revenue generation. The coming months will be crucial in determining whether these moves will solidify DraftKings’ position as a leader in the evolving landscape of online gambling and financial technology. Stay tuned to archyde.com for the latest updates on this developing story and in-depth analysis of the igaming industry.
