DraftKings cuts profit outlook as prediction-market investment reaches $700 million

DraftKings sharply reduced its 2026 profit outlook after committing up to $700 million of adjusted EBITDA to its prediction-markets business, even as third-quarter revenue rose 16% to $1.33 billion. The company now expects full-year adjusted EBITDA of $175 million to $275 million, down from $700 million to $900 million previously.

The company also lowered its 2026 revenue forecast to $6.35 billion to $6.55 billion, from $6.5 billion to $6.9 billion. It said the lower EBITDA outlook was primarily the result of greater investment in DraftKings Predictions, with $175 million to $225 million expected in the fourth quarter alone.

Predictions revenue is expected to be immaterial this year because promotions for new customers offset most gross revenue. Jason Robins, the chief executive, said net revenue was “pretty close to neutral,” and that roughly 90% of the difference between gross and net revenue reflected those promotions.

DraftKings recorded an adjusted EBITDA loss of $316.9 million in the third quarter, compared with a $126.5 million loss a year earlier, while its net loss widened to $468.7 million from $256.8 million. Sales and marketing expense climbed 68% to $605.7 million.

Operating cash flow over the first nine months fell to $63 million from $342.4 million in the comparable 2025 period. DraftKings had about $1.1 billion of cash and cash equivalents at Sept. 30.

Shares fell 21% to $18.51 on Friday after the spending disclosure. Morningstar analyst Dan Wasiolek described the investment as bigger than investors had anticipated, while Citizens said the midpoint of the revised EBITDA range was 65% below its $644 million consensus estimate.

DraftKings said more than 1.6 million customers had used Predictions so far this year. Its October annualized consumer volume reached $10.1 billion, almost three times July’s level, while annualized total traded volume hit $56.8 billion, more than five times July’s figure. The company said it had become the number-three exchange by total volume.

As we reported in October, customer-acquisition costs across prediction markets had risen close to sportsbook levels during the NFL season. DraftKings said its 2026 Predictions cohort is expected to repay its acquisition costs in about 20 months, faster than its two-year target, and was already generating about $350 million in annualized adjusted gross profit.

The company expects 2027 revenue of $7.35 billion to $7.75 billion and adjusted EBITDA of $800 million to $1 billion. It forecast $650 million to $750 million in Predictions revenue next year, alongside a further $250 million to $350 million of adjusted EBITDA investment.

Those projections assume a mid-2028 Supreme Court ruling on sports-event contracts. DraftKings said it would adjust its Predictions investment in response to regulatory developments involving sports contracts.