Despite a 16% increase in third-quarter revenue, DraftKings has lowered its full-year 2026 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) forecast by as much as $625 million, citing investments in its “prediction markets” business.
The company now expects an adjusted EBITDA of $175 million to $275 million, down from its previous projection of $700 million to $900 million. Its revenue guidance has also been revised downward, from a range of $6.5 billion–$6.9 billion to $6.35 billion–$6.55 billion.
This downward revision follows the release of DraftKings’ third-quarter financial results, which showed a net loss of $468.7 million—compared to a $256.8 million loss in the same period last year—as revenue gains were offset by higher operating expenses.
For the nine months ending September 30, the company’s net loss reached $515.3 million, roughly triple the $132.7 million loss recorded during the same period in 2025. While revenue grew by 9% to $4.42 billion, the company’s operating loss widened from $167.6 million to $555.5 million.
The pre-tax loss for the nine-month period rose from $140 million to $527.6 million, and adjusted EBITDA shifted from a profit of $276.8 million in the prior-year period to a loss of $34.4 million.
DraftKings attributed the reduction in its annual earnings outlook primarily to plans to invest $650 million to $700 million in its “prediction” business—a platform that allows customers to trade contracts based on the outcomes of various events. Additionally, the company cited increased investment in its iGaming business and unfavorable sports outcomes—meaning customers won more frequently—as factors contributing to the revised forecast. The company expects its “Predictions” business to contribute a negligible amount to its 2026 reported revenue, as promotional activities aimed at customers will offset the vast majority of the gross revenue generated by this segment. In the fourth quarter alone, the investment in this business—measured in terms of its impact on adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization)—is projected to be between $175 million and $225 million.
Meanwhile, DraftKings anticipates that its core sports betting and iGaming operations will generate between $875 million and $925 million in adjusted EBITDA for the full year.
This expansion comes at a time of intensifying competition within the “prediction market” sector. Both DraftKings and FanDuel have rolled out “prediction” products in states where traditional sports betting has yet to be legalized. These companies also face competition from established prediction market platforms such as Kalshi and Polymarket.
Despite the short-term impact on profitability, DraftKings projects that its “Predictions” business will generate between $650 million and $750 million in revenue by 2027, helping the company reach a total revenue of $7.35 billion to $7.75 billion. The midpoint of this forecast range implies a growth rate of approximately 17%, while the upper end represents an 18.3% increase over the revised 2026 forecast ceiling.
For next year, revenue from its core business is expected to fall between $6.7 billion and $7.0 billion, with an adjusted EBITDA of $1.15 billion to $1.25 billion. After accounting for an additional $250 million to $350 million in investments toward the “Predictions” business, the company’s consolidated adjusted EBITDA is projected to be between $800 million and $1 billion. Alan Ellingson, Chief Financial Officer of DraftKings, stated:
“Our core business continues to generate significant free cash flow, which we are reinvesting into the growth of our ‘Predictions’ product—an initiative we expect will yield an attractive return on investment.”
In the third quarter, revenue from the sports segment—which includes both betting and prediction markets—grew by 32% to $783.6 million, driven by a 22% increase in total sports handle (the total amount wagered), which reached $13.9 billion. The net revenue margin for the sports segment also improved, rising from 5.2% to 5.6%. Revenue from the iGaming segment increased by 2% to $460.9 million, while other operations contributed $84.5 million, bringing total quarterly revenue to $1.33 billion.
Monthly Unique Payers (MUPs) grew by 13% to 4.1 million, with the average revenue per MUP increasing by 3% to $109. However, sales and marketing expenses surged by 68% to $605.7 million, and the cost of revenue rose by 15% to $900 million. Spending on product and technology, as well as general and administrative expenses, also saw increases.
Consequently, the quarterly operating loss widened from $271.9 million to $493.1 million, while the loss before taxes grew from $270.5 million to $478.7 million. A tax benefit of $7.3 million and a loss of $17.3 million from equity-method investments also factored into the final net result. The adjusted EBITDA loss expanded from $126.5 million to $316.9 million.
Jason Robins, Founder and CEO of DraftKings
Jason Robins, Founder and CEO of DraftKings, noted that more than 1.6 million customers have engaged with the company’s “Predictions” product so far this year. Jason Robins, co-founder and CEO of DraftKings, stated: “The third quarter marked a pivotal moment for DraftKings; the ‘prediction’ products we have been building are now serving as a powerful driver of our business growth.”
“Year-to-date, more than 1.6 million customers have engaged with our ‘prediction’ products. Combined with the robust performance of our core business, we believe the company is well-positioned for exceptional growth by 2027.”
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