DraftKings, Kalshi and Robinhood executives discuss prediction markets and regulation

Prediction markets are gaining attention as tools for investment analysis, consumer engagement, and risk assessment, but their growth is also raising questions about sports trading, market integrity, and the regulatory line between event contracts and gambling, panelists said during a Milken Institute session moderated by Axios Business Editor Dan Primack.

The discussion featured Stephanie Guild, chief investment officer at Robinhood; Brian Quintenz, a former Commodity Futures Trading Commission commissioner and a board member of the Kalshi Exchange and its clearinghouse; and Paul Liberman, co-founder and president of operations at DraftKings. The panelists described prediction markets as probability-based signals that can inform decisions, but not replace wider analysis.

A major point of debate was whether sports-event contracts on prediction markets are meaningfully different from sports betting. Primack repeatedly pressed the panel on that distinction, particularly as sports accounts for a large share of activity in prediction markets. 

Quintenz said Kalshi’s sports volume has declined from the high 80% range to about 70% of total volume, partly because of the large number of sporting events available for trading. He also said election-related activity could increase as the midterm cycle approaches.

Liberman said sports are an unusual category because fan loyalty can influence behavior more than in other markets, though sports markets can still provide a useful reading of likely outcomes. He said DraftKings sees value in prediction-market data for both sportsbook operations and event-contract products.

The DraftKings executive said prediction markets could broaden engagement nationwide, including in states where sports betting is not legal, and could create additional products tied to areas such as elections or crypto. 

But when asked whether sportsbooks or prediction markets would be preferable if a state allowed only one, Liberman said sportsbooks offer a “better consumer experience,” citing customer preference, promotions, and reinvestment opportunities that are harder to replicate in prediction markets.

Regulation and enforcement were also central to the discussion. Quintenz argued that derivatives markets differ from gambling because they can support price discovery and risk management. He said Congress created the current legal framework and that regulators should avoid making merit-based judgments about which markets have value.

Quintenz said there is confusion between federally regulated exchanges and offshore venues. He added that regulated platforms such as Kalshi operate under rules covering contract restrictions, surveillance, know-your-customer requirements, wash trading, and insider activity. Contracts tied to war, terrorism, assassination, or death, he said, would likely be viewed by the CFTC as contrary to the public interest because of the risk that they could incentivize harm.

Brian Quintenz, former CFTC commissioner

For investors, Guild said prediction markets can add context but should not be treated as a standalone signal. She added that Robinhood uses them “part of a mosaic” when assessing expectations around events such as Federal Reserve decisions or company-specific questions, including whether Palantir will beat earnings.

“Expectations are everything when it comes to investing,” Guild said, noting that strong results may still disappoint if investors had already priced in more. She added that faster information sources, including social platforms and podcasts, can move ahead of traditional institutional research.

The panelists ended by framing prediction markets as one input rather than a definitive forecasting tool. Liberman said they should be viewed as “a data point,” while Guild added she would not rely on them “100%” for a major personal decision, but would consider them alongside other analysis.