Wall Street research firm Bernstein has identified a growing consolidation trend in the prediction market industry, with major consumer platforms increasingly bringing exchange and clearing infrastructure in-house. In a research note published on Monday, Bernstein analysts highlighted DraftKings' recent launch of its own CFTC-regulated DKeX exchange as the latest step in an eight-month build that moved prediction-market activity away from CME and Crypto.com infrastructure. The firm acquired CFTC-designated contract market Railbird for up to $250 million in October 2025. 'The revenue share that used to leave the building now stays inside it,' the analysts wrote.
Bernstein pointed to similar vertical integration moves elsewhere. Robinhood and Susquehanna rebranded MIAXdx as Rothera and shifted high-volume World Cup contracts from Kalshi to their own platform. Robinhood has already traded over 16 billion event contracts year-to-date in 2026, surpassing its 2025 total. Coinbase launched event contracts and subsequently acquired The Clearing Company to internalize clearing operations as part of its 'everything exchange' strategy, reportedly reaching $100 million in annualized prediction-market revenue within two months.
As these major platforms build full-stack ownership, Bernstein sees Kalshi and Polymarket as potential acquisition targets. While both own regulated infrastructure, they trail larger consumer platforms in distribution reach. Kalshi holds a roughly $22 billion private valuation and Polymarket $15 billion, compared to DraftKings' $12.5 billion market cap. Polymarket acquired QCEX for $112 million to support its U.S. re-entry, and Kalshi remains the incumbent that newer entrants seek to route around. The report suggests that the convergence of sportsbooks, brokerages, and exchanges opens a tangible range of M&A scenarios, including sportsbooks acquiring exchanges and trading platforms buying sportsbooks. However, a Flutter-DraftKings merger is seen as having less than 5% probability due to likely regulatory opposition, referencing the FTC's 2017 block of a DraftKings-FanDuel deal.
Bernstein maintains Outperform ratings on DraftKings, Robinhood, and Coinbase, and a Market-Perform on Flutter, while flagging risks from regulatory changes, competitive pressures, and market volatility.
