DraftKings, Robinhood, Coinbase Push for Exchange M&A

Bernstein analysts wrote that the consolidation of prediction-market exchange and clearing infrastructure by DraftKings, Robinhood and Coinbase could expand merger and acquisition options across sportsbooks, brokerages and exchanges. The firm described bringing those functions in-house as a factor that increases the range of strategic combinations in the industry.

DraftKings completed an eight-month build of a regulated exchange, launching DKeX after acquiring Railbird, a CFTC-designated contract market, for up to $250 million in October 2025. The company moved prediction-market activity off third-party rails such as CME and Crypto.com and migrated its DraftKings Predictions product onto the newly regulated venue after earlier steps that included launching the product on third-party infrastructure in December and adding market-making and self-certifying sports contracts in late May. Bernstein summarized the effect on economics with a quote: “The revenue share that used to leave the building now stays inside it.”

Robinhood and trading firm Susquehanna rerouted high-volume World Cup contracts through a rebranded MIAXdx platform, now called Rothera, rather than routing that activity through Kalshi. Robinhood reported trading more than 16 billion event contracts year-to-date in 2026, up from 12 billion for all of 2025, according to Bernstein's note.

Coinbase introduced event contracts and acquired The Clearing Company to bring clearing operations in-house. Bernstein estimated Coinbase reached roughly $100 million in annualized prediction-market revenue within two months of launching those products.

Bernstein contrasted those vertically integrated platforms with pure-play exchanges. Kalshi and Polymarket own regulated exchange infrastructure but lag larger consumer platforms on distribution. The note put Kalshi’s private valuation at about $22 billion and Polymarket’s at about $15 billion, while DraftKings’s market capitalization was near $12.5 billion and Flutter’s around $17 billion. Polymarket acquired QCEX for $112 million to support a return to the U.S. market. Bernstein described Kalshi as the incumbent that several larger platforms have sought to route around by building proprietary rails.

The analysts listed a wider set of plausible M&A combinations: sportsbooks buying exchanges, trading platforms acquiring sportsbooks, and consolidation among betting operators. They said a merger between Flutter and DraftKings is strategically attractive because the companies hold large customer-acquisition databases and complementary positions in the prediction-market value chain, but assigned the deal less than a 5% probability, citing likely regulatory scrutiny and narrow market definitions. The note referenced regulatory precedent: the FTC moved in 2017 to block a proposed DraftKings-FanDuel merger, which led the companies to abandon that deal.

Bernstein reiterated Outperform ratings on DraftKings, Robinhood and Coinbase and a Market-Perform rating on Flutter. The firm listed downside risks for DraftKings and Flutter, including unfavorable sporting outcomes, slower adoption of parlay products, changes to online gaming taxes, slower state-level legalization and reputational risks. Robinhood faces regulatory risk tied to payment-for-order-flow practices and oversight of its crypto business. Coinbase’s risks include competitive pressure from international exchanges and brokers, delayed U.S. digital-asset legislation and volatility in the broader crypto market.

The analysts described recent vertical integration as a structural change in how prediction markets operate, with platforms seeking to retain more revenue and control more of the trading stack. They said that consolidation of infrastructure narrows the set of logical partners and targets for future deals, while regulatory hurdles and market dynamics will shape which combinations are feasible.