- Company name
- DraftKings
- Sector
- Online sports betting & gaming
- About
- DraftKings runs online sports betting, online casino games (iGaming), daily fantasy sports and, since December 2025, a prediction market product called Predictions. Its mobile sports betting is live in 27 US states, Washington, D.C. and Puerto Rico, about 53% of the US population, and iGaming is live in 5 states. It also operates in Canadian provinces with about 51% of the Canadian population. DraftKings makes money from the share of bets that customers lose (the hold), after promotions, and it pays state taxes and fees to market access partners. In Q3 2026, it had 4.1 million monthly unique payers, and customers bet or traded $13.9 billion on sports through its Sportsbook and Predictions. Its largest costs are marketing, promotions, taxes and the technology to run its own betting platform.
- Thesis
- The market prices DraftKings at a discount because prediction markets such as Kalshi and Polymarket threaten its sports betting business. These platforms offer sports event contracts in many states under federal rules, without state licenses or state betting taxes, and they spend heavily on advertising. DraftKings launched its own Predictions product and spends heavily on it, so profit falls. In Q3 2026, revenue rose 16% to $1.33 billion, but the adjusted EBITDA loss was $317 million. On November 5, 2026, DraftKings cut its 2026 adjusted EBITDA guidance to $175 million to $275 million, from $700 million to $900 million, because it now expects to invest $650 million to $700 million in Predictions. Rival Fanatics plans to spend up to $1 billion on betting ads in 2027. For the gap to close, three things must be true. Courts or regulators must limit sports event contracts to licensed operators, as the Ninth Circuit did for Nevada on August 28, 2026, and a wider ruling must follow, possibly from the Supreme Court. DraftKings must meet its first 2027 outlook of $7.35 billion to $7.75 billion of revenue and $800 million to $1.0 billion of adjusted EBITDA. Its core business must earn the planned $1.15 billion to $1.25 billion of adjusted EBITDA in 2027, and Predictions must reach $650 million to $750 million of revenue with a smaller loss. The Q4 2026 report, expected in February 2027, and court decisions through mid-2027 are the next tests. If regulators restrict prediction markets, or DraftKings wins share in them at a profit, the gap can close over the next four to six quarters. The main risk is that federal rules keep prediction markets open in every state, so that state-licensed betting loses its protection.
- Risks
- Prediction markets offer sports event contracts in many states without state licenses or state betting taxes. If federal rules let them operate everywhere, they can take customers and lower the value of DraftKings' state licenses. Courts disagree, and the Supreme Court was asked in September 2026 to decide.
Spending on Predictions, promotions and advertising lowers profit. The adjusted EBITDA loss was $317 million in Q3 2026, and DraftKings plans $250 million to $350 million of investment in Predictions in 2027. Rivals such as Fanatics and the prediction markets plan large advertising budgets for 2027.
Sports outcomes change results each quarter. Customer-friendly outcomes lowered revenue in Q2 2026, and Susquehanna flagged weak sports betting margins in October 2026.
States can raise betting taxes or add rules on gambling ads and responsible gaming. Quartz reported in September 2026 that the Massachusetts Gaming Commission is looking into how DraftKings used AI to target customers who lose money. On October 15, 2026, Louisiana extended the DraftKings license only for four months, with conditions that include answers on its AI use, and a press report said that the FTC started an early review of sportsbook ads.
iGaming growth slowed. Jefferies said that iGaming grew 5.4% in Q2 2026, which can be the slowest pace in DraftKings' history.
- Balance sheet
- Cash: $1.1B
Debt: $2.2B
Net debt: $1.1B
Undrawn credit line: $738M, to August 2031
Debt due within 12 months: $13M
Last debt due: 2033
DraftKings funds itself with convertible notes and secured term loans. At September 30, 2026, debt principal was $2,236 million: $945 million of zero-coupon convertible notes due March 15, 2028, $591 million of a term loan due 2032 and $700 million of a term loan due 2033. On August 31, 2026, DraftKings bought back $320 million of the convertible notes for $300 million in cash, with money from the new term loan. Cash and cash equivalents were $1,101 million at September 30, 2026. This excludes $557 million of cash reserved for users, which belongs to customers and matches part of the $1,030 million of liabilities to users. The $750 million revolving credit facility, due August 2031, had no loans and $738 million available. DraftKings had an operating loss of $555 million in the first nine months of 2026, so interest cover does not apply. Its total equity fell to $180 million at September 30, 2026, from $631 million at December 31, 2025, after losses and share buybacks.
As of Sep 30, 2026.
- Checkpoints
- Nov 5, 2026: Q3 2026 results: Predictions spending and the 2026 outlook. Failed. Watch: A kept 2026 outlook of $700 million to $900 million of adjusted EBITDA and growing Predictions volume pass; a lower outlook or a larger Predictions loss fails. Outcome: DraftKings cut its 2026 adjusted EBITDA guidance to $175 million to $275 million, because it now plans $650 million to $700 million of investment in Predictions.
Feb 5, 2027 (estimate): Full-year 2026 results: Q4 Predictions spending and the 2027 outlook. Pending. Watch: A 2026 adjusted EBITDA within $175 million to $275 million and a kept 2027 outlook of $800 million to $1.0 billion pass; a lower 2027 outlook or a larger Predictions loss fails.
Feb 18, 2027: Louisiana license renewal hearing. Pending. Watch: A full renewal of the Louisiana license passes; a refusal, or new conditions that limit marketing or products, fails.
Q2 2027 (estimate): Court and regulatory decisions on sports prediction markets. Pending. Watch: Rulings that let states require licenses for sports event contracts pass; a federal ruling that lets prediction markets offer sports contracts in every state fails.
- Recent events
- Nov 5, 2026: DraftKings reported Q3 2026 results. Revenue rose 16% to $1,329 million, and monthly unique payers rose 13% to 4.1 million. Spending on Predictions raised sales and marketing costs to $606 million from $360 million. The net loss was $469 million, and the adjusted EBITDA loss was $317 million. DraftKings cut its 2026 guidance to revenue of $6.35 billion to $6.55 billion and adjusted EBITDA of $175 million to $275 million, with $650 million to $700 million of investment in Predictions. Its first 2027 guidance is revenue of $7.35 billion to $7.75 billion and adjusted EBITDA of $800 million to $1.0 billion.
Oct 16, 2026: The NBA told its partner sportsbooks to stop some bets from the 2026-27 season. The list includes parlays of unders on the same player, opening tip bets and first basket bets.
Oct 15, 2026: The Louisiana Gaming Control Board gave DraftKings a conditional four-month extension of its sports betting license, which ends on November 10, 2026. The full renewal hearing is set for February 18, 2027. The board asked for written answers on how DraftKings uses AI, on prediction markets and on missing suitability filings of some large shareholders, with six other conditions. The board said that news reports are not findings of violations.
Oct 15, 2026: Jefferies expects about $100 million more spending on Predictions in the second half of 2026 than the plan of $200 million to $300 million. It said that DraftKings is now the third-largest US prediction exchange by volume.
Oct 13, 2026: The Washington Sun reported that the FTC started an early review of online sportsbooks, such as DraftKings and FanDuel, with a focus on possibly misleading ads. The FTC did not comment, and the companies said that the FTC had not contacted them.
Oct 2, 2026: Fanatics said that it plans to spend up to $1 billion on betting ads in 2027. DraftKings and FanDuel's parent Flutter fell to new multiyear lows, as reports said that Kalshi seeks a valuation of about $40 billion.
Sep 23, 2026: DraftKings' audit committee dismissed BDO as auditor, effective after the 2026 audit, and appointed Deloitte for 2027.
Aug 28, 2026: The US Court of Appeals for the Ninth Circuit ruled that sports event contracts are sports bets and not swaps. The ruling lets Nevada treat sports prediction markets as unlicensed sportsbooks, and it rejected appeals by Kalshi and Crypto.com. DraftKings stock rose nearly 10%.
Aug 25, 2026: DraftKings closed a $700 million senior secured term loan due 2033 at SOFR plus 2.00%, mainly to buy back part of its convertible notes due 2028. It also replaced its $500 million revolving credit facility with a $750 million facility due August 2031.
Aug 6, 2026: DraftKings reported Q2 2026 results. Revenue was $1,443 million, down 5%, because of customer-friendly sports outcomes and more promotions for Sportsbook and Predictions. Sports betting volume rose 15% to $13.1 billion, and monthly unique payers rose 9% to 3.6 million. Adjusted EBITDA was $115 million against $301 million a year earlier, and the net loss was $68 million. DraftKings kept its 2026 outlook.
Jun 9, 2026: DraftKings said that annualized consumer volume in Predictions grew 24% from April to May 2026, to $1.3 billion.