DraftKings is entering the red-hot prediction markets business, launching technology that lets users trade contracts linked to sporting and financial events.

DraftKings said event contracts will be available for trading in 38 states and that the company will eventually expand beyond sports and finance into other markets, such as entertainment and culture. The sports betting company announced Friday it is debuting DraftKings Predictions, a mobile app and web product that will be regulated by the Commodity Futures Trading Commission.

"Along with our operational footprint, marketing and analytics infrastructure and advanced in-house technology, we believe we are uniquely positioned to lead this space over the long term," Corey Gottlieb, chief product officer of DraftKings, said in a statement.

DraftKings said its app, which is expected to be available in major app stores within days, will connect with multiple exchanges, starting with the derivatives marketplace CME Group.

Once they have a DraftKings account, users can enter the DraftKings Predictions app and start trading by clicking on the yes/no questions associated with an event, such as an NFL game, and deciding how much money they want to wager.

More specifically, users originate the trades, while DraftKings acts as a broker, Jeanine Hightower-Sellitto, the general manager of DraftKings Predictions, told CBS News.

"We're handling that order and it's getting sent to an exchange for it to be executed," she explained.

DraftKings faces growing competition from prediction markets — including Kalshi and Polymarket, now valued at $9 billion and $11 billion, respectively — that enable users to speculate on the outcome of sports and other events.

In October, DraftKings announced the acquisition of Railbird Technologies, a federally regulated prediction market. At the time, DraftKings said the deal supports its "broader strategy to enter prediction markets."

Some prediction market platforms lacking a license for sports wagering have faced pushback from state regulators. Event contracts traded on markets are regulated differently from sports bets, which are illegal in certain states.

Others have criticized the move by prediction markets to facilitate speculation on sports. Charlie Baker, the president of the NCAA, recently called out Kalshi on social media after the company filed forms to accept bets on the transfer decisions and status of student-athletes, saying it would threaten "competition integrity and recruiting processes."

"We certify markets all the time that we do not end up listing," Kalshi said on X on Dec. 18. "We have no immediate plans to list these contracts."

Headquartered in Boston, DraftKings was launched in 2012 as a sports entertainment and gaming company. Among its offerings are a fantasy sports product, which allows users to build virtual sports team lineups and compete against other users, and a mobile sports betting platform called DraftKings Sportsbook, where customers can place bets on sports, players, leagues and events.

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