Hold onto your hats, sports betting fans! Cathie Wood’s Ark Invest is making a surprising move, ditching DraftKings stock. Is she betting on a new kind of game? Learn why Ark is turning its attention to prediction markets and what it means for the upcoming NFL season. Could this reshape the future of wagering?

Cathie Wood’s Ark Invest, known for its bold investment strategies, appears to be strategically shifting its focus within the burgeoning sports betting market, moving away from established giants like DraftKings in favor of innovative prediction markets. This significant pivot comes just ahead of the highly anticipated 2025 NFL season, signaling a potential new direction for how investors perceive the future of sports wagering and digital engagement.

Throughout August, Ark Invest systematically divested substantial portions of its DraftKings Inc. stock across three of its prominent exchange-traded funds (ETFs). Daily email updates confirm sales from the Ark Innovation ETF (ARKK), Ark Next Generation Internet ETF (ARKW), and Ark Fintech Innovation ETF (ARKF), marking the first such transactions involving DraftKings stock in several months. This strategic selling significantly reduced DraftKings’ footprint within these key investment vehicles.

This recent divestment represents a stark contrast to Ark Invest’s previous investment thesis regarding DraftKings. Historically, DraftKings had been a cornerstone of Ark’s portfolio, holding a much larger percentage of the funds. For instance, in 2023, DraftKings ranked as the seventh-largest holding in ARKK, ninth in ARKW, and third in ARKF, highlighting its former prominence and Ark’s strong conviction in the traditional sports betting leader.

For years, Cathie Wood and the Ark Invest team championed DraftKings, often citing its near-duopoly status in the competitive sports betting sector and its proven ability to fend off emerging competitors. The company’s established market position and brand recognition were key factors in Ark’s long-term investment strategy, believing in its sustained growth potential within regulated markets.

However, that long-held thesis now appears to be evolving, largely due to the rapid ascent and increasing sophistication of prediction markets like Kalshi and Polymarket. These platforms offer a novel approach to event wagering, allowing consumers to bet on various outcomes, including the granular details of NFL games for the 2025 season such as over/under, spreads, and touchdown bets, mirroring options traditionally found on online sportsbooks. Furthermore, Robinhood has also entered this innovative space, launching prediction markets for NFL and NCAA Football, expanding the competitive landscape significantly.

The economic models underlying these new platforms offer a compelling alternative to traditional sportsbooks. As industry expert Grous highlighted, Robinhood’s prediction market charges a flat, transparent fee of $0.02 per contract traded, with outcomes directly based on market probabilities. In contrast, conventional sports betting operators like DraftKings typically embed their profit margins, often between 4-6%, directly within their odds, creating a less transparent cost structure for consumers.

Another critical differentiator lies in regulatory navigation. DraftKings, operating in numerous U.S. states and Washington, D.C., faces a complex web of regulatory approvals in each jurisdiction, a process that inherently adds friction between operators and their user base. Prediction markets, depending on their specific structure, may encounter different or potentially fewer regulatory hurdles, allowing for quicker market expansion and less operational overhead.

The 2025 NFL season is poised to be a pivotal moment for the sports betting industry, as it will reveal whether prediction markets successfully disrupt the segment, or if traditional sports betting platforms can maintain their dominance. This shift could lead to a deceleration in new customer acquisition for established sportsbooks or even spark an escalation in promotional marketing spending as they intensely fight off competition from these agile new entrants. This competitive dynamic is a crucial aspect of the evolving investment strategy for market participants.

Crucially, Robinhood is already a top-tier holding in ARKK, ARKW, and ARKF, reflecting Ark’s prior confidence in the company, particularly its future in cryptocurrency. Now, Robinhood offers Ark a dual opportunity: to capitalize on the growth of both cryptocurrency and these innovative prediction markets, effectively enabling Ark to strategically reduce its exposure to DraftKings while simultaneously positioning itself for future growth areas.