A major sports betting company is planning on expanding its operations into event contracts, which experts warn could be dangerous. DraftKings announced on Tuesday that it has acquired Railbird Technologies, a federally-licensed exchange allowing users to bet on and trade event contracts.

“The acquisition supports DraftKings’ broader strategy to enter prediction markets, expanding its addressable opportunity through regulated event contracts,” DraftKings shared in a statement. “We also confirmed plans to launch DraftKings Predictions, a forthcoming mobile application that will allow customers to trade regulated event contracts on real-world outcomes across finance, culture, and entertainment.”

While sports betting programs like DraftKings allow users to place bets on sports, event contracts in prediction markets allow users to place bets on nearly any event, although DraftKings says that its initial launch of the program will limit users to betting on “finance, culture, and entertainment.” Event contracts in the prediction market are not subject to the same strict regulations governing most traditional forms of betting and gambling and are instead regulated by the Commodity Futures Trading Commission (CFTC).

“We are excited about the additional opportunity that prediction markets could represent for our company,” DraftKings CEO Jason Robins said in a statement. “We believe that Railbird’s team and platform — combined with DraftKings’ scale, trusted brand, and proven expertise in mobile-first products — positions us to win in this incremental space.”

The CFTC has typically been skeptical of event contracts in the predictions market, warning that large-scale event contracts betting like those offered by Kalshi, Inc. are difficult to regulate and may even be illegal in some cases. For example, Kalshi permitted betting on the outcome of the presidential election last year, potentially undermining the integrity of the election by giving voters a financial motivation to vote or not vote for a particular candidate. While Kalshi has seemed poised to dominate the event contracts and prediction market, which experts have warned could be catastrophic for the U.S. economy, DraftKings is now encroaching on that territory.

The latter company, however, has been accused of profiting from predatory practices. DraftKings has been sued for allegedly identifying and exploiting gambling addicts, not only allowing gambling addicts to place bets using their apps but targeting them for exclusive incentives and “VIP” treatment. The city of Baltimore filed a lawsuit against DraftKings earlier this year, accusing the sports betting behemoth and its chief rival, FanDuel, of engaging in “deceptive and unfair practices by targeting and exploiting vulnerable gamblers…” Baltimore Mayor Brandon Scott (D) said at the time, “DraftKings and FanDuel have specifically targeted our most vulnerable residents — including those struggling with gambling disorders — and have caused significant harm as a result.” Shortly afterwards, bettors in Pennsylvania filed a class-action lawsuit, charging DraftKings with predatory and deceptive practices aimed at inflaming gambling addictions.

In comments to The Washington Stand, a DraftKings spokesperson insisted that the company will not take advantage of users in the event contracts market. “The same principles that have made us a leader in Responsible Gaming across daily fantasy sports, sports betting, and iGaming will be applied for Responsible Trading on DraftKings Predictions, including tools and resources for all customers,” he said.

Gambling industry analysts have previously suggested that organizations like Kalshi may be using the federally-regulated event contracts market as a means of evading stricter state-level regulations. The DraftKings spokesperson responded, “Event contracts are federally regulated financial products under the Commodity Exchange Act, its implementing regulations, and CFTC oversight. They are distinct from sports betting and iGaming, which fall under state gaming laws. DraftKings is exploring this category thoughtfully.” He continued, “We plan to introduce regulated event contracts in a way that complements our existing business and maintains the strong regulatory relationships that support it.”

However, Stop Predatory Gambling National Director Les Bernal pressed back against DraftKings’ claims, telling TWS, “A rapidly growing number of Americans believe the institution of predatory gambling is a cruel and oppressive system and represents a glaring contradiction between our practice and our creed as a nation.” He continued, “The latest example is the news that DraftKings is now trying to move into the prediction markets scheme that will inflict massive financial pain and mental health harm for millions of young American men who represent their target audience.”

“This is why momentum is intensifying to abolish the institution of predatory gambling in our country because it’s been an epic public policy failure by every measure,” Bernal added.