Bernstein says prediction-market infrastructure rush could spark wave of M&A across consumer platforms

DraftKings' launch of its DKeX exchange represents the latest stage of operational consolidation across prediction markets, with leading trading, crypto, and betting platforms increasingly bringing exchange infrastructure in-house, according to analysts at research and brokerage firm Bernstein.

In a note to clients on Monday, the analysts said DraftKings moved prediction-market activity off CME and Crypto.com infrastructure onto its own CFTC-regulated venue after spending eight months assembling the underlying components.

DraftKings acquired Railbird, a CFTC-designated contract market, for up to $250 million in October 2025. The DKeX launch was the final step in an eight-month build that included launching DraftKings Predictions on third-party rails in December, adding market-making and self-certifying sports contracts in late May, per the note. 

"The revenue share that used to leave the building now stays inside it," the analysts wrote.

Bernstein highlighted similar moves elsewhere. Robinhood and Susquehanna rebranded MIAXdx as Rothera and routed high-volume World Cup contracts through the platform rather than through Kalshi, which previously handled that activity. Robinhood has traded more than 16 billion event contracts year-to-date in 2026, compared with 12 billion during all of 2025, the firm said.

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Coinbase launched event contracts before acquiring The Clearing Company to bring clearing operations in-house as part of its broader "everything exchange" strategy. Bernstein said Coinbase reached roughly $100 million in annualized prediction-market revenue within two months of launch.

Pure-play exchanges hold infrastructure but trail on scale

While the major platforms are converging toward ownership of the full prediction-market stack, Bernstein said differences remain in consumer reach.

Robinhood and Coinbase have moved furthest by pairing large-scale distribution with owned exchange and clearing infrastructure, according to the analysts. DraftKings follows through its Railbird acquisition and DKeX rollout.

Kalshi and Polymarket, by contrast, own their regulated infrastructure but trail larger consumer platforms on distribution, Bernstein said, leaving both as potential acquirers or targets as consolidation continues. Kalshi holds a roughly $22 billion private valuation and Polymarket $15 billion, against DraftKings' $12.5 billion market cap and Flutter's $17 billion.

Polymarket acquired QCEX for $112 million to support its return to the U.S. market, according to the firm. Kalshi remains the incumbent that many newer entrants are now attempting to route around through proprietary infrastructure.

M&A question turns ‘tangible’

Bernstein said the convergence of sportsbooks, brokerages, and exchanges broadens the range of potential mergers, including sportsbooks acquiring exchanges, trading platforms acquiring sportsbooks, and consolidation among betting operators themselves.

A potential merger between Flutter and DraftKings is strategically compelling but faces a less than 5% probability, according to Bernstein, because regulators would likely draw a narrow market definition. The FTC moved to block a DraftKings-FanDuel merger in 2017, prompting the companies to abandon the deal, alleging the combined entity would control more than 90% of the U.S. daily fantasy sports market.

The firm said the strategic rationale remains strong, with DraftKings and Flutter holding the two richest customer-acquisition databases in American betting and complementary positions across the prediction-market value chain.

Ratings and risks

Bernstein reiterated its Outperform ratings on DraftKings, Robinhood, and Coinbase and its Market-Perform rating on Flutter.

For DraftKings and Flutter, the firm cited unfavorable sporting outcomes, slower parlay adoption, online gaming tax changes, slower state-level legalization, and reputational risks as key downside factors.

Robinhood faces regulatory risks tied to payment for order flow and crypto trading oversight, according to Bernstein, while Coinbase remains exposed to competitive pressure from international exchanges and brokers, as well as delays to U.S. digital asset legislation and broader crypto market volatility.