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DraftKings reported higher third-quarter revenue but a substantially larger net loss as it ramped up investment in prediction markets. The company generated $1.33 billion in revenue during the three months ended Sept. 30, up 16.2% from $1.14 billion a year earlier.
Its net loss attributable to common stockholders nevertheless widened to $468.7 million from $256.8 million. The results highlight the financial cost of developing DraftKings Predictions alongside its established sports betting and online casino businesses.
The results also prompted DraftKings to significantly reduce its 2026 financial forecasts. Although sports-related revenue and customer numbers increased, the company’s aggressive investment strategy has raised questions about when its prediction markets business will begin delivering meaningful returns.
Sports revenue drives growth as marketing costs surge
DraftKings’ quarterly revenue growth was driven primarily by stronger customer engagement and improved sportsbook margins.
Sports revenue climbed 31.5% to $783.6 million, making it the largest contributor to overall growth. Sports consumer volume reached $13.9 billion, up 21.9% year over year. The sports net revenue margin improved from 5.2% to 5.6%, reflecting a higher sportsbook hold percentage, partially offset by promotional investment in Predictions.
Online casino performance was considerably slower. Online casino revenue increased just 2.1% to $460.9 million, while revenue from other activities declined 12.5% to $84.5 million.
At the end of September, DraftKings offered mobile sports betting in 27 states, Washington, D.C., and Puerto Rico. Its online casino products were available in five states.
The company reported 4.1 million monthly unique paying customers, approximately 13% more than a year earlier. Average revenue per monthly payer rose 3% to $109, largely reflecting stronger sports margins.
However, attracting and retaining customers came at a considerably higher cost. Sales and marketing expenses jumped 68.1% to $605.7 million from $360.4 million a year earlier. DraftKings attributed the increase to investment in Predictions, its Super App launch, the FIFA World Cup and new market openings.
Operating losses consequently increased to $493.1 million from $271.9 million. Its adjusted EBITDA loss, a non-GAAP measure of operating performance, reached $316.9 million, compared with $126.5 million in the third quarter of 2025.
Predictions investment slashes 2026 financial outlook
DraftKings’ growing investment in prediction markets has significantly affected its financial outlook, despite encouraging early customer engagement.
Chief Executive Jason Robins said more than 1.6 million customers had used Predictions during the first nine months of 2026.
“Our Predictions customers are highly engaged, retaining at high levels and trading significant volume,” Robins said during the earnings call.
The company expects its 2026 Predictions investment to reach between $650 million and $700 million on an adjusted EBITDA basis. However, promotional spending is expected to offset most of the gross revenue generated by the business this year.
DraftKings consequently lowered its full-year revenue forecast to between $6.35 billion and $6.55 billion, down from its previous range of $6.5 billion to $6.9 billion.
Its adjusted EBITDA guidance also fell sharply, from $700 million-$900 million to $175 million-$275 million.
Meanwhile, DraftKings expects its core business to generate adjusted EBITDA of between $875 million and $925 million. Chief Financial Officer Alan Ellingson said cash generated by established operations was helping fund the company’s Predictions expansion.
DraftKings bets on predictions for 2027 growth
Despite the near-term financial pressure, DraftKings believes its investment will produce more substantial returns next year.
The company introduced 2027 revenue guidance of $7.35 billion to $7.75 billion, with adjusted EBITDA projected at $800 million to $1 billion.
The forecast assigns between $650 million and $750 million in revenue to Predictions, a significant increase from the company’s expectation of immaterial revenue in 2026. However, DraftKings also anticipates another $250 million-$350 million in adjusted EBITDA investment in the business.
For its core operations, DraftKings forecasts 2027 revenue of $6.7 billion-$7 billion and adjusted EBITDA of $1.15 billion-$1.25 billion.
The outlook has not entirely reassured investors. According to MarketWatch’s Nov. 6 report, DraftKings shares fell more than 26% that Friday as investors reacted to the increased spending and concerns surrounding competition and regulatory uncertainty.
Regulatory developments remain particularly important for sports-related prediction contracts. Management indicated it would continue reassessing investment levels as the legal landscape evolves.
Across the first nine months of 2026, DraftKings generated $4.42 billion in revenue, up 8.7% year over year. Its net loss reached $515.3 million, compared with $132.7 million over the same period in 2025. Adjusted EBITDA also turned negative, with a $34.4 million loss reversing the $276.8 million profit recorded a year earlier.
DraftKings ended September with approximately $1.1 billion in cash and cash equivalents. As iGaming News Gods originally reported, the company is prioritizing customer acquisition and long-term growth in prediction markets. Whether that strategy can deliver the expected returns without further pressure on profitability remains a central question heading into 2027.
