DraftKings reported revenue of $1.33 billion for the third quarter of this year, a 16% increase from $1.14 billion in the same period last year. This growth was driven by higher user engagement and an improved net revenue margin for sports betting.
Monthly unique paying users grew by approximately 13% to 4.1 million, while the average revenue per paying user rose by 3% to $109. The net revenue margin for sports betting improved to 5.6%, up from 5.2% in the third quarter of the previous year.
The company also reported an Adjusted EBITDA loss of $316.9 million. Revenue fell short of analysts’ expectations of approximately $1.39 billion, and the adjusted loss per share was $0.53, compared to the market’s projected loss of $0.25 per share.
Jason Robins, CEO and co-founder of DraftKings, stated: “The third quarter was a pivotal moment for DraftKings. Our ‘Predictions’ product is currently driving significant growth for the company. Year-to-date, more than 1.6 million users have engaged with the ‘Predictions’ product; combined with the robust performance of our core business, we believe we are well-positioned for exceptional results in 2027.”
Expenditures related to the “Predictions” product impact the 2026 financial outlook.
DraftKings expects full-year 2026 revenue to be between $6.35 billion and $6.55 billion, with an Adjusted EBITDA projected to range from $175 million to $275 million.
This updated outlook incorporates $650 million to $700 million in investments related to the “Predictions” product (factored into the Adjusted EBITDA figures). Of this amount, $175 million to $225 million is planned for investment during the fourth quarter. Management anticipates that revenue from the “Predictions” product will remain modest in 2026, as a significant portion of the total revenue generated will be offset by user promotions.
As of October, the product’s annualized total handle (total wagered amount) reached $56.8 billion—a fivefold increase since July—with $10.1 billion of that coming from consumer wagers. DraftKings reported a take rate of 11.1%, noting that the company retained 65.6% of the total revenue. In October, the annualized run rate for adjusted gross profit reached $350 million, with a promotional rate of 18%.
Alan Ellingson, CFO of DraftKings, stated in a company press release: “Our core business continues to generate significant free cash flow, which we are reinvesting into the growth of our ‘Predictions’ product—an investment we expect to pay back very favorably. We have issued guidance for fiscal year 2027, projecting revenue between $7.35 billion and $7.75 billion (a 17% year-over-year increase at the midpoint) and adjusted EBITDA between $800 million and $1 billion (at the midpoint, inclusive of a $300 million investment in the ‘Predictions’ business).”
DraftKings expects its core business to generate between $875 million and $925 million in adjusted EBITDA in 2026.
Sports Business Revenue Drives Quarterly Growth
In the third quarter of 2026, the total handle for the Sportsbook and “Predictions” offerings reached $13.9 billion, an increase of 22% year-over-year.
Combined revenue from the Sportsbook and “Predictions” businesses grew by 31.5% to $784 million. Currently, DraftKings’ Sportsbook offering is live across 27 states, Washington, D.C., and Puerto Rico. For the first nine months of 2026, the win margin remained at 6.7%, consistent with the same period last year.
In the third quarter, iGaming revenue grew by 2.1% to $460.9 million. For the first nine months of 2026, revenue from online casino operations increased by 6.1%.
During the quarter, DraftKings also launched sports betting and iGaming operations in the province of Alberta. The company currently offers iGaming services in five U.S. states.
The 2027 financial guidance reflects an increased contribution from the “Predictions” business.
DraftKings projects 2027 revenue to be between $7.35 billion and $7.75 billion, with adjusted EBITDA expected to range from $800 million to $1 billion. Core revenue is forecast at $6.7 billion to $7 billion, while core adjusted EBITDA is projected to reach $1.15 billion to $1.25 billion.
For the “Predictions” business, revenue is expected to be between $650 million and $750 million next year, with an investment plan of $250 million to $350 million in adjusted EBITDA for this product line.
The company’s operating margin for the third quarter was negative 37.1%, compared to negative 23.8% in the same period last year. Free cash flow shifted from a positive $283 million to a negative $82.13 million.
Following the earnings release, DraftKings’ stock price fell by 23% to $18.08.
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